The Importance of Selected Structural Competitiveness Indicators for Exports : A Comparative Analysis between the Euro Area and Greece

Structural (non-price) competitiveness departs from price or cost competitiveness and captures a multitude of dimensions, both quantitative and qualitative, affecting a country’s trade and openness. Greece over time has lagged behind in key structural competitiveness indicators relative to other euro area countries, but has improved its position in some of the indicators over the recent years, in terms of relative prices and unit labour costs. The paper examines the evolution of price and structural competitiveness, the latter approximated with institutional quality indicators published by international organisations, recording the performance of Greece and euro area countries over the last decade, on an annual basis, in order to gain more insight into how exports are affected. A panel regression of an export demand function is estimated for the 19 euro area member countries, separately for each of the selected indicators. It is confirmed that structural competitiveness, along with price competitiveness, has played an important role in determining exports in the euro area and in Greece over the 2007-19 period. The authors report greater sensitivity of Greek exports to institutional quality indicators, compared with average euro area exports. This is an indication of the faster pace of reform implementation in other euro area countries, while the reforms in Greece are in a process of catching up. The implementation of structural reforms in the direction of improving institutional deficiencies has contributed, among other factors, to the observed post-crisis export-led growth in Greece. In conclusion, the pace of reforms already under way should be accelerated, and this will be mirrored in the country’s structural competitiveness indicators and expressed as better scores and higher rankings converging towards the performance of the other euro area countries