What is the formula for price competitiveness?

Question

How can I calculate the price competitiveness for exports from one country to other countries?

Answer 1

There doesn't exist a single formula to calculate a country's price competitiveness. Price competitiveness is specific to a given market, e.g., a country can be very competitive in the market for wooden children toys, but not very competitive in the market for software coding. There is no easy way to aggregate the price competitiveness across markets.

To complicate things further, a country can be very price competitive in a given market, yet import restrictions in other countries might prevent the more competitive country to take advantage through international trade. Hence, you cannot simply infer the price competitiveness from looking at trade balances.