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Import Competition and Quality Upgrading

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  • Mary Amiti
  • Amit K. Khandelwal

Abstract

It is important to understand the factors that influence a country's transition from the production of low-quality to high-quality products since the production of high-quality goods is often viewed as a pre-condition for export success and, ultimately, for economic development. In this paper, we provide the first evidence that countries' import tariffs affect the rate at which they upgrade the quality of their products. We analyze the effect of import competition on quality upgrading using highly disaggregated export data to the U.S. from fifty-six countries in 10,000 products using a novel approach to measure quality. As predicted by recent distance to the frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15503.

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Date of creation: Nov 2009
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Publication status: published as 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.
Handle: RePEc:nbr:nberwo:15503

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Citations

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Cited by:
  1. Olper, Alessandro & Curzi, Daniele & Pacca, Lucia, 2014. "Do food standards affect the quality of EU imports?," Economics Letters, Elsevier, vol. 122(2), pages 233-237.
  2. Nakhoda, Aadil, 2012. "The influence of financial leverage of firms on their international trading activities," MPRA Paper 35765, University Library of Munich, Germany.
  3. Martin, Julien & Mejean, Isabelle, 2014. "Low-wage country competition and the quality content of high-wage country exports," Journal of International Economics, Elsevier, vol. 93(1), pages 140-152.
  4. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1450-1476.
  5. Nicholas Bloom & Mirko Draca & John Van Reenen, 2011. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," NBER Working Papers 16717, National Bureau of Economic Research, Inc.
  6. Elisaveta Archanskaia & Guillaume Daudin, 2012. "Heterogeneity and the Distance Puzzle," Documents de Travail de l'OFCE 2012-17, Observatoire Francais des Conjonctures Economiques (OFCE).
  7. Konstantins Benkovskis & Ramune Rimgailaite, 2010. "The Quality and Variety of Exports from New EU Member States: Evidence from Very Disaggregated Data," Working Papers 2010/02, Latvijas Banka.
  8. John Sutton & Daniel Trefler, 2011. "Deductions from the Export Basket: Capabilities, Wealth and Trade," NBER Working Papers 16834, National Bureau of Economic Research, Inc.
  9. Robert C. Feenstra & John Romalis, 2012. "International Prices and Endogenous Quality," NBER Working Papers 18314, National Bureau of Economic Research, Inc.
  10. Italo Colantone & Rosario Crinò, 2011. "New Imported Inputs, New Domestic Products," Development Working Papers 312, Centro Studi Luca d\'Agliano, University of Milano.

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