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Export quality dynamics

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  • Krishna, Pravin
  • F. Maloney, William

Abstract

Country export quality (measured by unit values) is correlated with income level suggesting that studying quality dynamics potentially offers insights into the development process. This paper uses highly disaggregated trade data to explore the export quality (unit value) dynamics of goods exported to the United States over the 1990-2000 period. In addition to finding considerable heterogeneity in the relative quality of exports across countries and across goods within countries, the authors find that the rate of quality growth varies substantially across countries, as well. Specifically, the fastest growth is seen in exports from the richer (OECD) countries, implying an evolving divergence in product quality across regions. This divergence obtains despite evidence of conditional convergence in quality over time- goods with lower initial relative quality levels experience faster growth in quality. The data suggest that part of this divergence is driven by the product mix itself -- OECD exported products experience intrinsically higher growth rates. This is consistent with the argument of Hausmann, Hwang and Rodrik (2007) that what countries export does matter for growth. However, it is partly driven by a higher growth rate of quality in the richer countries independent of convergence effects, suggesting that other country-specific factors impeding overall convergence are at work. Finally, there is very limited technological"leap-frogging"by countries across product lines as the relative quality of new exports, on average, is roughly the same as incumbent exports, both in richer countries and elsewhere.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5701.

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Date of creation: 01 Jun 2011
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Handle: RePEc:wbk:wbrwps:5701

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Keywords: Economic Theory&Research; Transport and Trade Logistics; Common Carriers Industry; Poverty Monitoring&Analysis; Achieving Shared Growth;

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  1. Robert J. Barro, 2003. "Determinants of Economic Growth in a Panel of Countries," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 505, China Economics and Management Academy, Central University of Finance and Economics.
  2. Kugler, M., Verhoogen, E.A., 2008. "Product Quality at the Plant Level: Plant Size, Exports, Output Prices and Input Prices in Colombia," Working Papers, Wilfrid Laurier University, Department of Economics eg0058, Wilfrid Laurier University, Department of Economics, revised Feb 2008.
  3. Amit Khandelwal, 2009. "The Long and Short (of) Quality Ladders," NBER Working Papers 15178, National Bureau of Economic Research, Inc.
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  5. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 42(3), pages 752-782, September.
  6. Robert J. Barro & Rachel McCleary, 2003. "Religion and Economic Growth," NBER Working Papers 9682, National Bureau of Economic Research, Inc.
  7. Xavier Sala-i-Martin & Elsa V. Artadi, 2003. "The economic tragedy of the XXth century: Growth in Africa," Discussion Papers, Columbia University, Department of Economics 0203-17, Columbia University, Department of Economics.
  8. Juan Carlos Hallak & Peter K. Schott, 2011. "Estimating Cross-Country Differences in Product Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 417-474.
  9. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2008. "Productivity, quality and exporting behavior under minimum quality constraints," MPRA Paper 24146, University Library of Munich, Germany.
  10. Plumper, Thomas & Martin, Christian W, 2003. " Democracy, Government Spending, and Economic Growth: A Political-Economic Explanation of the Barro-Effect," Public Choice, Springer, Springer, vol. 117(1-2), pages 27-50, October.
  11. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 646-677, May.
  12. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
  13. Michael E. Waugh, 2009. "Human Capital, Product Quality, and Bilateral Trade," 2009 Meeting Papers, Society for Economic Dynamics 1204, Society for Economic Dynamics.
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