# **1. INTRODUCTION**

In the past two decades, international trade has become a privileged engine of growth for much of the developing world. However the global economy is changing rapidly. While the current degree of globalization remains unchanged, countries need to continuously reposition themselves in the global trade and production map. With advanced countries increasingly retrenching and specializing, South-South trade is growing in volume and scope, creating many new opportunities, in particular for competitive developing economies, but also new challenges for developing and developed countries alike.

In this framework is it important for countries to understand how they fare relative to competitors and to their past export performance. However, assuming that country A is “more competitive” in trade than country B – or compared to itself a decade earlier – simply because it is growing exports faster, is too simplistic. Even using relative performance in terms of market share growth may be prone to misinterpretation. This is because export growth is composed of two different types of effects: compositional effects and performance effects. Two countries may actually have similarly competitive bundles of export firms, but overall export performance of one country will be higher in the short-medium term because it has a more favorable (at the time) composition of exports, in terms of geographical markets or sectors.

This paper proposes and describes a new Export Competitiveness Database (ECD), which allows distinguishing between sectoral and geographical composition of exports and other factors specific to the exporting country and to track their evolution over time, at a quarterly frequency. Assuming that country A is more competitive than country B if its exports and market shares increase over and above those of countries having the same composition of exports, export performance can be considered a proxy for countries’ competitiveness or supply-side performance. In other words, this effect is a natural metric for export competitiveness since it isolates the effects of a change in demand and a change in composition from the changes due to other determinants of export performance.

The interpretation of the export performance effect as a proxy for relative trade competitiveness follows a consolidated tradition in the trade literature (see for example Magee, 1968, 1975, Leamer and Stern, 1970; Richardson, 1971 and Milana, 1988). Since data in value are subject to possible bias driven by price effects (Richardson, 1970), the information in the database also allows distinguishing between price and volume components.

Specifically, the Export Competitiveness Database computes and makes publicly available information on the various components of export performance for 228 countries and territories. The indicators are provided with a quarterly frequency and computed as year-on-year changes relative to the same quarter of the previous year. Since the underlying bilateral export data are available from 2005 onward, the first data point in our database is relative to 2006q1 and reports the percentage change of each variable relative to 2005q1. The last data point refers to 2013q1. The database will be updated on a semi-annual basis and indicators are expected to cover information up to six months earlier. In the process, we identify interesting patterns of trade performance across countries.

On average, over the eight years covered by the data set, export performance, stripped of compositional effects, was strongest for countries from the Asia and the Pacific region. Moreover such performance was almost entirely driven by exporting country specific factors, with changes reflecting volume growth rather than price developments. The export performance effect remained 3