Summary Measure for Price and Non-price Competitiveness for ASEAN+3

In this paper we apply a comprehensive measure that allows us to distinguish price and non-price aspects of competitiveness. Our measure is computationally demanding but has the advantage of building on a single data source of highly disaggregated trade data. We extend the methodology pioneered by Feenstra (1994), and Broda and Weinstein (2006), and construct an export price index that adjusts for changes in the set of competitors (variety) and changes in non-price factors (quality in a broad sense) for six ASEAN members (the Philippines, Indonesia, Malaysia, Singapore, Thailand and Vietnam) plus China, Japan and Korea. Based on trade data from UN COMTRADE at the Harmonized System six-digit level over the period 2000-2011, we find notable differences between price and non-price competitiveness across markets. China and Vietnam show huge gains in international competitiveness due to non-price factors, while we observe some deterioration in the non-price competitiveness of Japan and Singapore. However, these relative developments do not reflect the existing differences in the absolute levels of the quality of exported goods by those countries.