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Quality upgrading of Italian manufactures: evidence from firms’ prices and strategies

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  • Valter Di Giacinto

    ()
    (Bank of Italy, Regional Economic Research Unit, L’Aquila Branch)

  • Giacinto Micucci

    ()
    (Bank of Italy, Regional Economic Research Unit, Ancona Branch)

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 804.

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Date of creation: Apr 2011
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Handle: RePEc:bdi:wptemi:td_804_11

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Keywords: Even before the global crisis; the Italian economy was in difficulties internationally; but slow growth and a declining share of world trade were accompanied by a perceptible process of manufacturing transformation. This paper; using data from the Bank of Italy’; s survey of manufacturers; measures a crucial aspect of the transformation; namely quality upgrading; from 2000 to 2006. The gauge of upgrading; not used in earlier literature; is the portion of price changes representing the return to value creation; both tangible (new products and improvement of existing ones) and intangible (branding policies). We find evidence of upgrading capable of explaining a quarter of the firms’; average annual price increases (about 0.5 out of 2 percentage points); with roughly equal effects from the tangible and the intangible components. The analysis also shows that strategies of product upgrading helped foster job creation and sales growth.;

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