The Impact of Price-Cost Competitiveness Factors on Economic Growth

Open access


The aim of this study is to verify the assumption that price-cost competitiveness factors affect long-term economic growth in the sample countries. This analysis is based on the neoclassical growth model extended by human capital. Furthermore, variables reflecting the cost-competitiveness and cost-effective real exchange rate and unit labor costs were added to the model. The default is a panel regression methodology and related methods of data analysis. The sample consists of EU member states that meet the requirement of a small open economy and membership in the OECD. On the basis of this criterion, the following countries were selected: Belgium, Czech Republic, Denmark, Estonia, Ireland, Hungary, Netherlands, Austria, Slovenia and the Slovak Republic. Annual frequency in the time frame 1999-2010 is the reference period. This is shown by the analysis results in the case that the selected sample of countries with affordable cost factors appears to be significant. The selected indicators of competitiveness can be one of the prominent factors that influence economic growth in developed countries, yet they are not a fully sufficient and comprehensive source of growth factors in terms of competitiveness.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • BALCAROVÁ P. BENEŠ M. (2006). Metodologie měření a hodnocení makroekonomické Konkurenceschopnosti. Centrum výzkumu konkurenční schopnosti české ekonomiky. Working Paper 9/2006 Brno.

  • BALTAGI H. B. (2010). Econometric Analysis of Panel Data. 4nd ed. John Wiley & Sons.

  • BAUMOL J. W. (1967). Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis. The American Economic Review vol. 57 no. 3.

  • BLEANEY M. NISHIYAMA A. (2002). Explaining Growth: A Contest Between Models. Journal of Economic Growth no 7 pp. 43-56. DOI: 10.1023/A:1013466526642

  • BREITUNG J. (2000). The Local Power of Some Unit Root Tests for Panel Data. In B. Baltagi (ed.). Advances in Econometrics vol. 15: Nonstationary Panels Panel Cointegration and Dynamic Panels Amsterdam: JAI Press pp. 161-178.

  • CHOI I. (2001). Unit Root Tests for Panel Data Journal of International Money andFinance vol. 20 pp. 249-272. DOI: 10.1016/S0261-5606(00)00048-6

  • DOMAR D. E. (1946). Capital Expanasion Rate od Growth and Empoyment. Econometrica no. 4 pp. 137-147.

  • Eurostat (2012). European Commission database. Retrieved January 19 2012 from

  • EZEALA-HARRISON F. (2011). On The competing notions of internationalcompetitiveness. Retrieved January 16 2012 from

  • FELIPE J. (2005). A note on competitiveness unit labour costs and growth: Is„Kaldor´s paradox“a figment of interpretation? Working Paper 6/2005 Retrieved January 17 2012 from

  • FOGEL W. R. (1994). Economic Growth Population Theory and Physiology: The Bearings of Long-Term Processes on the Making of Economic Policy National BureauOf Economic Research: Working Paper no. 4638.

  • GRANGERC. HUANG L-L. (1997). Evaluation of Panel Data Models: Some Suggestions From Time Series. Discussion Papaper no. 97 - 10 1-29.

  • HARROD F. R. (1939). An Essay in Dynamic Theory. The economic Journal vol. 49 no. 193 pp 14-33.

  • HÄMÄLÄINEN T. J. (2003). National competitiveness and economic growth: thechanging determinants of economic performance in the world economy. 1st. ed. Edward Elgar Publishing.

  • HEILBRONNER L. R. MILBERG W. S. (1997). The Crisis of Vision in ModernEconomic Thought. 1st. ed. Cambridge University Press.

  • HINDLS R. et al (2003). Ekonomicky slovník. Praha: C.H. Beck.

  • HSIAO Cheng (2003). Analysis of Panel Data. 2-nd ed. Cambridge: Cambridge University Press.

  • IM K-S. PESARAN M. H. SHIN Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics vol. 115 pp. 53-74. DOI: 10.1016/S0304-4076(03)00092-7

  • INSTITUT FOR MANAGEMENT AND DEVLOPMENT (2007). WorldCompetitiveness Yearbook 2007.

  • KRUGMAN P. (1997). Pop intnationalism Massachusetts: MIT Press.

  • LEVIN A. LIN C-F. CHU C-S. J. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics no. 108 pp. 1-24.

  • LUCAS E. R. (1988). On the Mechanics of Economic Development. Journal ofMonetary Economics vol. 22 no. 1 pp. 3-42.

  • MANKIW N. ROMER G. WEIL D. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics vol. 107 no. 2 pp. 407-437.

  • PORTER E. M. (1990). The Competitive Advantage of Nations. New York: The Free Press.

  • PORTER E. M. (1994). Konkurenční strategie: metody pro analýzu odvětví akonkurentů. Praha: Victoria Publishing.

  • ROMER M. P. (1986). Increasing Returns and Long-Run Growth. Journal of PoliticalEconomy vol. 94 no. 5 pp. 10-19.

  • SALA-I-MARTIN X. (1997). ‘I Just Ran Two Million Regressions’ AmericanEconomic Review no. 87pp. 178-183.

  • SOLOW M. R. (1956). Contribution to the Theory of Economic Growth. QuartelyJournal of Economics no. 70 pp. 65-94.

  • SWAN W. T. (1956). Economic Growth and Capital Accumulation. The EconomicRecord no. 63 pp. 334-361.

  • ŠMÍDKOVÁ K. (1995). Vývoj přístupu k makroekonometrickému modelování. Politická ekonomie vol 4 no 1 pp. 113-124.

  • TURNER P. VAN’T DACK J. (1993). Measuring international price and cost competitiveness. BIS Economic Papers no. 39. Retrieved January 16 2012 from

  • WOOLDRIDGE J. M. (2002). Econometric Analysis of Cross Section and Panel. Messachusetts Institue of Technology. 752 p.

  • ZEMANOVÁ V. (2005). Teoretická východiska pro pojetí konkurenční schopnosti podniku. Acta Oeconomica Pragensia vol. 13 no. 2.

Journal information
Impact Factor

CiteScore 2018: 0.66

SCImago Journal Rank (SJR) 2018: 0.21
Source Normalized Impact per Paper (SNIP) 2018: 0.682

Cited By
All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 211 113 2
PDF Downloads 142 117 2