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| Title | Towards an Index of Industrial Capability |
| Abstract | The aim of this paper is to construct an index of industrial capability which may serve as an early warning mechanism to the export performance of sectors producing manufactures with medium and high technological content. Taking multi-collinearity and significance issues into account, the econometric analysis of a panel of 61 countries with annual data ranging from 1970 to 1998 is used in order to determine the variables (Granger-)causing export performance as measured by the revealed comparative advantage index. Two modelling strategies are adopted: one based on the estimation of a production function-like specification of revealed comparative advantage, and another one based on the search of the specification with best statistical features. Models with different specifications for the set of explanatory variables are compared in terms of their forecasting accuracy for the actually realized index of revealed comparative advantage, and the variables included in the model with better in- and out-of-sample features are combined to form the index of industrial capability, by means of the parameters estimated from the panel data analysis. The characteristics of the index are reported for Thailand and three other Southeast Asian economies, and the country ordering induced by different specifications of the industrial capability index is presented for the time interval 1990-1998. |
| Date | 2001 |
| Language(s) | English |
| Pages | 34 pages |
| Download the Report(34 pages/259 Kb) |