Export performance, price competitiveness and technology: Revisiting the Kaldor paradox

Arbeitspapier

We reassess the contemporary relevance of the "Kaldor paradox" (1978), according to which changes in relative unit labor costs as well as relative export prices are positively correlated with advanced countries' export shares in world markets - although conventional trade theory predicts the opposite. Using a sample of 34 OECD countries over the period 1980-2015, we find clear evidence for the continued relevance of Kaldor's paradox. Our findings indicate that the paradox can neither be resolved by pointing to a lack of econometric sophistication in Kaldor's original work nor by exploiting additional data on other major determinants of export success (e.g. technology). A reverse-causality interpretation - according to which export success allows countries to increase relative unit labor costs without substantially reducing international competitiveness - seems most promising for rationalizing the paradox.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ICAE Working Paper Series ; No. 88

Classification and Topics

• Classification: Wirtschaft
• Subject: Trade ; export success ; competitiveness ; technology ; Kaldor effect

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gräbner, Claudius ; Heimberger, Philipp ; Kapeller, Jakob
• Event: Veröffentlichung
• (who): Johannes Kepler University Linz, Institute for Comprehensive Analysis of the Economy (ICAE)
• (where): Linz
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/193627
• Last update: 10.03.2025, 11:41 AM CET