Competitiveness and economic integration in IDB member countries

Abstract EN

Recently the issue of the real exchange rate management has received renewed attention from prominent development economist in leading universities and development intuitions.

Example of some of the recent work include Gala (2007), Eichengreen (2007), Prasad et al.

(2006) and Rodrik (2009).

The main theme of this recent research is the importance of managing the real exchange rate as growth facilitating factor.

Research on this area has shown that both the level and the volatility of the real exchange rate have important impact on exports, investment and growth in developing countries.

This study uses a new large data set for the real effective exchange rate for estimating real exchange rate over/under valuation for member countries.

The study also discusses the implication of the results on member countries of the Islamic Development Bank Group.