IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v59y2021icp281-291.html
   My bibliography  Save this article

Structural transformation and quality ladders: Evidence from the new Theil's decomposition

Author

Listed:
  • Gnidchenko, Andrey A.

Abstract

This paper examines structural transformation along the development path by linking export concentration to economic development in a cross-country setting. I explore the role of widening product mix, export restructuring and quality upgrading for the patterns of export concentration measured by the weighted Theil index. This study contributes to the literature by developing the decomposition of this index into the extensive, quantitative and qualitative components. I find that structural transformation is primarily driven by export restructuring according to the world demand and towards the products with higher potential to improve quality. Controlling for the world demand, re-specialization is not pronounced at a high level of economic development, while the ability to upgrade quality becomes increasingly important for the higher-middle-income and high-income countries.

Suggested Citation

  • Gnidchenko, Andrey A., 2021. "Structural transformation and quality ladders: Evidence from the new Theil's decomposition," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 281-291.
    • Handle: RePEc:eee:streco:v:59:y:2021:i:c:p:281-291
    DOI: 10.1016/j.strueco.2021.09.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X21001168
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.strueco.2021.09.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John Sutton & Daniel Trefler, 2011. "Deductions from the Export Basket: Capabilities, Wealth and Trade," NBER Working Papers 16834, National Bureau of Economic Research, Inc.
    2. Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
    3. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 129-173.
    4. Hartmann, Dominik & Zagato, Ligia & Gala, Paulo & Pinheiro, Flavio L., 2021. "Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 1-13.
    5. Jean Imbs & Romain Wacziarg, 2003. "Stages of Diversification," American Economic Review, American Economic Association, vol. 93(1), pages 63-86, March.
    6. Klinger, Bailey & Lederman, Daniel, 2006. "Diversification, innovation, and imitation inside the Global Technological Frontier," Policy Research Working Paper Series 3872, The World Bank.
    7. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    8. Lectard, Pauline & Rougier, Eric, 2018. "Can Developing Countries Gain from Defying Comparative Advantage? Distance to Comparative Advantage, Export Diversification and Sophistication, and the Dynamics of Specialization," World Development, Elsevier, vol. 102(C), pages 90-110.
    9. repec:gdk:wpaper:15 is not listed on IDEAS
    10. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1450-1476.
    11. Juan Carlos Hallak & Peter K. Schott, 2011. "Estimating Cross-Country Differences in Product Quality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 417-474.
    12. Aleksandra Parteka, 2010. "Employment and export specialisation along the development path: some robust evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 615-640, January.
    13. Mary Amiti & Amit K. Khandelwal, 2013. "Import Competition and Quality Upgrading," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 476-490, May.
    14. Rabah Arezki & Rachel Yuting Fan & Ha Nguyen, 2021. "Technology adoption and the middle‐income trap: Lessons from the Middle East and East Asia," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1711-1740, August.
    15. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    16. Haichao Fan & Yao Amber Li & Stephen R. Yeaple, 2015. "Trade Liberalization, Quality, and Export Prices," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 1033-1051, December.
    17. Justin Yifu Lin, 2012. "New Structural Economics : A Framework for Rethinking Development and Policy," World Bank Publications - Books, The World Bank Group, number 2232, December.
    18. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    19. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    20. Amit K. Khandelwal & Peter K. Schott & Shang-Jin Wei, 2013. "Trade Liberalization and Embedded Institutional Reform: Evidence from Chinese Exporters," American Economic Review, American Economic Association, vol. 103(6), pages 2169-2195, October.
    21. Christian Henn & Chris Papageorgiou & Jose Manuel Romero & Nikola Spatafora, 2020. "Export Quality in Advanced and Developing Economies: Evidence from a New Data Set," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 421-451, June.
    22. Parteka, Aleksandra & Tamberi, Massimo, 2013. "Product diversification, relative specialisation and economic development: Import–export analysis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 121-135.
    23. Robert C. Feenstra & John Romalis, 2014. "International Prices and Endogenous Quality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 477-527.
    24. Manova, Kalina & Yu, Zhihong, 2017. "Multi-product firms and product quality," Journal of International Economics, Elsevier, vol. 109(C), pages 116-137.
    25. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    26. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(5), pages 571-592, September.
    27. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 647-678.
    28. Karsten Mau, 2016. "Export diversification and income differences reconsidered: The extensive product margin in theory and application," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 351-381, May.
    29. Taylor, M. Scott, 1993. "'Quality ladders' and Ricardian trade," Journal of International Economics, Elsevier, vol. 34(3-4), pages 225-243, May.
    30. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meilin Zhao & Rui Zhang & Hong Liu & Xiaoyi Zhang & Yue Wang, 2023. "A Study on the Spatial-Temporal Evolution and Problem Area Identification of High-Quality Urban Development in the Central Region," Sustainability, MDPI, vol. 15(14), pages 1-21, July.
    2. Zarach, Zuzanna Helena & Parteka, Aleksandra, 2023. "Export diversification and dependence on natural resources," Economic Modelling, Elsevier, vol. 126(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrey A. Gnidchenko, 2019. "Structural Transformation and Quality Ladders: Solving the “Theil's Cube”," HSE Working papers WP BRP 218/EC/2019, National Research University Higher School of Economics.
    2. Gideon Ndubuisi & Solomon Owusu, 2022. "Trust, Efficient Contracting and Export Upgrading," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2708-2729, December.
    3. Curzi, Daniele & Pacca, Lucia, 2015. "Price, quality and trade costs in the food sector," Food Policy, Elsevier, vol. 55(C), pages 147-158.
    4. Freitag, Andreas & Lein, Sarah M., 2023. "Endogenous product adjustment and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 140(C).
    5. Chen, Natalie & Juvenal, Luciana, 2016. "Quality, trade, and exchange rate pass-through," Journal of International Economics, Elsevier, vol. 100(C), pages 61-80.
    6. Zarach, Zuzanna Helena & Parteka, Aleksandra, 2023. "Export diversification and dependence on natural resources," Economic Modelling, Elsevier, vol. 126(C).
    7. Andrey A. Gnidchenko, 2018. "Measuring product-level export quality: Evidence from Asian motor vehicles sector," FIW Working Paper series 185, FIW.
    8. Daniele Curzi & Lucia Pacca & Alessandro Olper, 2013. "Estimating Food Quality from Trade Data: An Empirical Assessment," LICOS Discussion Papers 33913, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    9. Gideon Ndubuisi & Solomon Owusu, 2021. "How important is GVC participation to export upgrading?," The World Economy, Wiley Blackwell, vol. 44(10), pages 2887-2908, October.
    10. Curzi, Daniele & Raimondi, Valentina & Olper, Alessandro, 2013. "Quality Upgrading, Competition and Trade Policy: Evidence from the Agri-Food Sector," 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152386, International Agricultural Trade Research Consortium.
    11. Adriana Peluffo & Juan Ignacio Scasso, 2016. "Destination and source countries: Do they have a role on product quality?," Documentos de Trabajo (working papers) 16-10, Instituto de Economía - IECON.
    12. Bas, Maria & Paunov, Caroline, 2021. "Input quality and skills are complementary and increase output quality: Causal evidence from Ecuador’s trade liberalization," Journal of Development Economics, Elsevier, vol. 151(C).
    13. Yan Liu & Walter G. Park & Dahai Fu, 2021. "Export quality and patent protection: Stage‐dependent effects in development," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 601-629, May.
    14. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
    15. Crinò, Rosario & Ogliari, Laura, 2015. "Financial Frictions, Product Quality, and International Trade," CEPR Discussion Papers 10555, C.E.P.R. Discussion Papers.
    16. Bas, Maria & Strauss-Kahn, Vanessa, 2015. "Input-trade liberalization, export prices and quality upgrading," Journal of International Economics, Elsevier, vol. 95(2), pages 250-262.
    17. Christian Henn & Chris Papageorgiou & Jose Manuel Romero & Nikola Spatafora, 2020. "Export Quality in Advanced and Developing Economies: Evidence from a New Data Set," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 421-451, June.
    18. Stefan Schiman & Andreas Reinstaller, 2015. "Analyse der Terms-of-Trade Österreichs," WIFO Studies, WIFO, number 60648, Juni.
    19. Saito, Hisamitsu, 2021. "Foreign direct investment and quality upgrading in Indonesian manufacturing," MPRA Paper 106770, University Library of Munich, Germany.
    20. Cieślik, Andrzej & Parteka, Aleksandra, 2021. "Relative Productivity, Country Size and Export Diversification," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 28-44.

    More about this item

    Keywords

    Export concentration; Economic development; Theil index; Unit value;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:59:y:2021:i:c:p:281-291. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.