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The deterioration of the Netherlands' export performance during the late 1970's: A matter of competitiveness or export structure?

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This article considers the question of what factors determined the unfavourable development in the Dutch export performance during the second half of the 1970's. Application of constant-market-shares analysis on value data led to the conclusion that this could not be attributed to the Dutch export structure, the influence of which on the value of exports was positive. To ascertain how this conclusion should be amended in case of volume data a regression analysis was carried out. This led to the conclusion that the worsening in the export performance after 1973 resulted from both the export structure and a weakening of competitiveness, the influence of both factors being about equal. These results were compatible as the positive influence of the export structure found by the CMS analysis could almost completely be ascribed to the price factor. As a by-product of the regression analysis the export elasticity is found to lie in the vicinity of −1.5.

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References

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  2. The influence of natural gas on the balance of current account, as incorporated in the calculations underlying figure 1, is equal to 2/3 the size of the direct effect. For a comment on this, see for example: J. Weitenberg,De betekenis van het aardgas voor onze economie (The Importance of Natural Gas for Our Economy), C.P.B. reprint, No. 151, The Hague, 1975; and: C.J. Jepma, ‘Is de Nederlandse ziekte chronisch?’ (Is the ‘Dutch Disease’ Chronic?) in: S.K. Kuipers (ed.),Vooruitzichten voor de Nederlandse economie (Prospects for the Netherlands' Economy), Leiden, 1980, pp. 41–63.

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  34. There are some differences between the two methods of explaining the development of exports: a) in equation (2) the export structure of the competing countries is brought in agreement with that of the Netherlands, while in CMS analysis the opposite occurs; this cannot influence the value of the elasticity, however; b) in equation (2) the double-weighted world trade functions as a determinant of the exports whereby the estimate of elasticity turns out to be 1, while in the CMS analysis this elasticity is initially assumed to be equal to 1; and c) in the CPB equation the structure effect is corrected by employing volume data (unit values), while the CMS analysis uses value data.

  35. By ‘structure mutation’ we mean a change in the difference between the structure of international demand and of the Netherlands' exports; if, for convenience, the latter has been assumed constant, than a structural mutation can be viewed as a change in the structure of international demand.

  36. This conclusion agrees almost completely with that arrived at by the WRR in their report (WRR, p. 195).

  37. For an explanation of CMS analysis, see for example: E.E. Leamer and R.M. Stern,Quantitative International Economics, Chicago, 1970, pp. 171–183. See also: J. Gerards and H. Jager, ‘De structurele ontwikkeling van de Nederlandse uitvoer. Een toepassing van c.m.s.-analyse’ (The Structural Development of The Netherlands' Exports: An Application of CMS Analysis),Economisch-Statistische Berichten, LXV (1980), pp. 64–69, and C.J. Jepma, ‘De c.m.s. analyse: een verbetering van de toepassingsmogelijkheden’ (The CMS Analysis: An Improvement in Applicability),Research Memorandum, Nr. 76, Groningen, 1981b.

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  1. Department of Economics at the University of Groningen, The Netherlands

    S. K. Kuipers (Professor of Economics)

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  1. S. Brakman
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  2. C. J. Jepma
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  3. S. K. Kuipers
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Brakman, S., Jepma, C.J. & Kuipers, S.K. The deterioration of the Netherlands' export performance during the late 1970's: A matter of competitiveness or export structure?. De Economist 130, 360–380 (1982). https://doi.org/10.1007/BF02371747

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