Measurement of Export Competitiveness of the Baltic States by Composite Index

Abstract

Theoretical and practical aspects of the measurement of export competitiveness are analyzed in this article. The relevance and timeliness of analysis of the concept of export competitiveness proves the fact that competition is a very important precondition, which affects the effectiveness of development of national economy under the conditions of globalization. The research of the concept of export competitiveness and the ways of improving competitiveness of national economy are especially relevant for the countries in the period of recovering from the outcomes of economic crisis of 2008 -2009. In the European Union, the worst influence of economics recession was brought on Baltic States – Lithuania, Latvia and Estonia economies. One of the most important factors, which could stimulate the development of national economy, is export. Its development is especially essential for small countries, which are too small to consume all the production made by these countries. Higher export competitiveness could help the country to overcome after-effects of economic recession and stimulate the development of the total national economy.

Export is often associated with competitiveness of the country at the international level. While the academic understanding of international competitiveness of the country is still forming, the factors of international competitiveness are still being identified in scientific literature, export competitiveness can be measured in different ways: by analyzing one or several factors of the country's export, creating composite indices, analyzing factors and conditions which stimulate the international trade, etc. As every method has its advantages and disadvantages, the scientists seek to find the most reliable, methodologically justified, understandable, convenient to practical use and objective method, which could be accepted generally and widely used in strategic planning on improving competitiveness of the national export and total national economy.

But why the measurement of export competitiveness is so important? The answer to this question is related to the fact, that if competitiveness can not be measured, it can not be improved. As Baltic States and other countries compete directly among each other for the export markets, the identification of the current situations of export competitiveness in comparison with other competitors and its variation in the period of time will provide the information necessary for the government, business and scientist sectors, which are creating, updating, implementing and evaluating efficiency of the export improvement strategy and various means for its stimulation.

This article presents the problems related to the increase of export competitiveness in the Baltic States and its measurement. The factors enhancing export development are distinguished, possibilities on application of the basic competitiveness models and methods and their application for measurement of the export competitiveness are analysed. Based on the conducted theoretical analysis, the index of measurement of the Baltic States export competitiveness was established, thus allowing to identify the main factors determining competitiveness of the Baltic States export and quantitative measure the competitiveness of the Baltic States export. The established index is empirically based when assessing competitiveness of the Baltic States export within the period of 2005 – 2010. The article ends by providing strategic proposals regarding increase in export competitiveness of Lithuania.

The newly created Baltic States export competitiveness index, presented in the article, is one of the ambitions to promote the methodological background for measurement of export competitiveness and promote establishment of conditions, stimulating national enterprises to export and be competitive within international markets.

DOI: http://dx.doi.org/10.5755/j01.ee.23.1.1218