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Quality-adjusted similarity of EU-countriesŽ export structure

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  • Kaitila, Ville

Abstract

We propose a new way to measure the extent to which countries compete in their exports. We augment the similarity index proposed by Finger and Kreinin (1979) with product quality. Quality is measured using unit export prices in the tradition of the horizontal/vertical intra-industry trade literature. We analyse the EU27 countries’ export structures using 1) overall similarity à la Finger and Kreinin, 2) same-quality similarity, and 3) quality-adjusted similarity that combines the first two measures. We find that the similarity of the export structures of the new member countries and the cohesion countries vis-à-vis the non-cohesion EU15 countries has increased, but that there remains a divide between them especially in terms of same-quality exports.

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Bibliographic Info

Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1227.

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Length: 18 pages
Date of creation: 01 Jan 2010
Date of revision:
Handle: RePEc:rif:dpaper:1227

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Keywords: exports; similarity; quality;

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References

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  1. Petr Jansky, 2010. "Rising unit values of Central and Eastern European exports: Rising quality in transition?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 3(2), pages 147-157.
  2. Antimiani, Alessandro & Henke, Roberto, 2006. "Old and new partners: similarity and competition in the EU foreign trade," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10082, European Association of Agricultural Economists.
  3. Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2008. "Specialization across varieties and North-South competition," Economic Policy, CEPR & CES & MSH, vol. 23, pages 51-91, 01.
  4. Torfinn Harding & Beata Smarzynska Javorcik, 2009. "A Touch of Sophistication: FDI and Unit Values of Exports," CESifo Working Paper Series 2865, CESifo Group Munich.
  5. 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.
  6. Grubel, Herbert G & Lloyd, P J, 1971. "The Empirical Measurement of Intra- Industry Trade," The Economic Record, The Economic Society of Australia, vol. 47(120), pages 494-517, December.
  7. Greenaway, David & Hine, Robert C & Milner, Chris, 1995. "Vertical and Horizontal Intra-industry Trade: A Cross Industry Analysis for the United Kingdom," Economic Journal, Royal Economic Society, vol. 105(433), pages 1505-18, November.
  8. David Greenaway & Robert Hine & Chris Milner, 1994. "Country-specific factors and the pattern of horizontal and vertical intra-industry trade in the UK," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(1), pages 77-100, March.
  9. Finger, J M & Kreinin, M E, 1979. "A Measure of 'Export Similarity' and Its Possible Uses," Economic Journal, Royal Economic Society, vol. 89(356), pages 905-12, December.
  10. Maria Paula Fontoura & Nuno Crespo, 2004. "Integration of CEECs into EU Markets: Structural Change and Convergence," Working Papers Department of Economics 2004/15, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  11. Luca De Benedictis & Lucia Tajoli, 2007. "Openness, similarity in export composition, and income dynamics," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(1), pages 93-116.
  12. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October.
  13. Aiginger, Karl, 1997. "The Use of Unit Values to Discriminate between Price and Quality Competition," Cambridge Journal of Economics, Oxford University Press, vol. 21(5), pages 571-92, September.
  14. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-22, December.
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Cited by:
  1. Kaitila, Ville, 2013. "Specialisation and/or Convergence: Structure of European Exports and Production," ETLA Working Papers 12, The Research Institute of the Finnish Economy.
  2. Crespo, Nuno & Simões, Nádia, 2012. "On the measurement of a multidimensional concept of structural similarity," Economics Letters, Elsevier, vol. 116(1), pages 115-117.

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