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The quality and variety of exports from the new EU member states

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  • Konstantins Benkovskis
  • Ramune Rimgailaite

Abstract

According to trade theories, the average quantity of exported goods is not the only parameter of export performance – the variety and quality of exports also play an important role. The goal of this paper is to evaluate the variety and quality of exports from the new EU Member States Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia (NMS) in 1999–2009. The analysis is done on the basis of methodology proposed by R. C. Feenstra (1994) and further developed by D. Hummels and P. Klenow (2005), and Ch. Broda and D. E. Weinstein (2006). Although unit values play an important role in defining export quality, the calculations herein take into account also market shares and the level of monopoly power of firms in a particular market. In addition, this study contributes to the existing literature by providing a different way of evaluating the variety assuming that the number of exported brands follows the Poisson distribution. The calculations show that exports from NMSs in 2009 were of lower quality in comparison with German exports: relative quality was ranging between 0.30 and 0.55. It was found that all NMSs significantly increased their average number of brands exported to the EU market; moreover, all NMSs were able to increase the average quality of their exports during the 10-year reference period. Finally, relative quality is much more stable than relative prices, providing evidence that the measure of relative quality developed herein is better than the traditional proxy, i.e. relative export prices, as it does not include relative costs of production but reflects structural factors.

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Bibliographic Info

Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 19 (2011)
Issue (Month): 4 (October)
Pages: 723-747

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Handle: RePEc:bla:etrans:v:19:y:2011:i:4:p:723-747

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References

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  1. Leamer, Edward E, 1981. "Is It a Demand Curve, or Is It a Supply Curve? Partial Identification through Inequality Constraints," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 319-27, August.
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  17. Dennis, Allen & Shepherd, Ben, 2007. "Trade costs, barriers to entry, and export diversification in developing countries," Policy Research Working Paper Series 4368, The World Bank.
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Citations

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Cited by:
  1. Wörz, Julia & Benkovskis, Konstantins, 2012. "Non-Price Competitiveness Gains of Central, Eastern and Southeastern European Countries in the EU Market," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3.
  2. Pula, Gabor & Daniel Santabarbara, Daniel, 2012. "Is China climbing up the quality ladder?," BOFIT Discussion Papers 23/2012, Bank of Finland, Institute for Economies in Transition.
  3. Silgoner, Maria & Steiner, Katharina & Wörz, Julia & Schitter, Christian, 2013. "Fishing in the same pool? export strengths and competitiveness of China and CESEE in the EU-15 Market," Working Paper Series 1559, European Central Bank.
  4. Wörz, Julia & Benkovskis, Konstantins, 2013. "How Does Quality Impact on Import Prices?," Working Papers 175, Oesterreichische Nationalbank (Austrian Central Bank).
  5. Francesco Di Comite, 2012. "Measuring quality and non-cost competitiveness at a country-product level," European Economy - Economic Papers 467, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  6. Eleonora Cavallaro & Piero Esposito & Alessia Matano & Marcella Mulino, 2012. "Technological catching up, quality of exports and competitiveness: a sectoral perspective," Working Papers 158, University of Rome La Sapienza, Department of Public Economics.
  7. David Aristei & Davide Castellani & Chiara Franco, 2013. "Firms’ exporting and importing activities: is there a two-way relationship?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(1), pages 55-84, March.
  8. Konstantīns Beņkovskis, 2012. "Competitiveness of Latvia's exporters," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 17-45, December.
  9. Benkovskis, Konstantins & Silgoner, Maria & Steiner, Katharina & Wörz, Julia, 2013. "Crowding-out or co-existence? the competitive position of EU members and China in global merchandise trade," Working Paper Series 1617, European Central Bank.

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