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Technological Catching Up, Quality of Exports, and Competitiveness: A Sectoral Perspective

  • Eleonora Cavallaro
  • Piero Esposito
  • Alessia Matano
  • Marcella Mulino

We analyze the relationship between Central and Eastern European countries (CEEC) industry-level competitiveness and technological catching up induced by economic integration with European Union (EU) economies. A theoretical dynamic setup is developed in which high-skill firms gain market share in "quality dominated" markets, whereas low-skill firms face price competition for their exports. We run econometric estimations for bilateral trade between CEEC and EU economies over 2000-2007. We first test the assumption that the unit value ratio is a good proxy for quality in trade and then use the fitted unit value ratio to estimate the role of preference for quality in CEEC market share changes. Estimations support the results of the theoretical model.

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Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 49 (2013)
Issue (Month): 6 (November)
Pages: 4-21

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Handle: RePEc:mes:emfitr:v:49:y:2013:i:6:p:4-21
Contact details of provider: Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

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  1. Juan Carlos Hallak, 2006. "A Product-Quality View of the Linder Hypothesis," NBER Working Papers 12712, National Bureau of Economic Research, Inc.
  2. Jørgen Nielsen & Teit Lüthje, 2002. "Tests of the empirical classification of horizontal and vertical intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 587-604, December.
  3. Miguel León-Ledesma, 2005. "Exports, Product Differentiation and Knowledge Spillovers," Open Economies Review, Springer, vol. 16(4), pages 363-379, October.
  4. 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.
  5. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
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  7. Hallak, Juan Carlos, 2006. "Product quality and the direction of trade," Journal of International Economics, Elsevier, vol. 68(1), pages 238-265, January.
  8. 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.
  9. Murphy, Kevin M. & Shleifer, Andrei, 1997. "Quality and trade," Journal of Development Economics, Elsevier, vol. 53(1), pages 1-15, June.
  10. Smulders, J.A., 2004. "International capital market integration : Implications for convergence, growth and welfare," Other publications TiSEM f8e8e574-5d17-4d9f-9119-2, Tilburg University, School of Economics and Management.
  11. Eleonora Cavallaro & Marcella Mulino, 2009. "Technological catching up, competitiveness and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(4), pages 505-525.
  12. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  13. Piero Esposito & Robert Stehrer, 2007. "The Sector Bias of Skill-biased Technical Change and the Rising Skill Premium in Transition Economies," wiiw Working Papers 43, The Vienna Institute for International Economic Studies, wiiw.
  14. repec:kap:iaecre:v:14:y:2008:i:3:p:265-279 is not listed on IDEAS
  15. Rosario Crinò & Paolo Epifani, 2010. "Productivity, Quality, and Export Intensities," Working Papers 457, Barcelona Graduate School of Economics.
  16. Uwe Dulleck & Neil Foster & Robert Stehrer & Julia Woerz, 2005. "Dimensions of quality upgrading," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(1), pages 51-76, 01.
  17. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 489-530.
  18. Juan Carlos Hallak & Peter K. Schott, 2008. "Estimating Cross-Country Differences in Product Quality," NBER Working Papers 13807, National Bureau of Economic Research, Inc.
  19. Michael Landesmann & Sebastian Leitner & Robert Stehrer & Terry Ward, 2009. "Skills and Industrial Competitiveness," wiiw Research Reports 356, The Vienna Institute for International Economic Studies, wiiw.
  20. Mark Bils & Peter J. Klenow, 2001. "Quantifying Quality Growth," American Economic Review, American Economic Association, vol. 91(4), pages 1006-1030, September.
  21. Christophe Rault & Guglielmo Maria Caporale & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation And Economic Convergence: Evidence From Two Eastern European Countries," William Davidson Institute Working Papers Series wp959, William Davidson Institute at the University of Michigan.
  22. Ashoka Mody & Deniz Igan & Stefania Fabrizio, 2007. "The Dynamics of Product Quality and International Competitiveness," IMF Working Papers 07/97, International Monetary Fund.
  23. Aturupane, Chonira & Djankov, Simeon & Hoekman, Bernard, 1997. "Determinants of intra-industry trade between East and West Europe," Policy Research Working Paper Series 1850, The World Bank.
  24. Nancy L. Stokey, 1991. "The Volume and Composition of Trade Between Rich and Poor Countries," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 63-80.
  25. Brooks, Eileen L., 2006. "Why don't firms export more? Product quality and Colombian plants," Journal of Development Economics, Elsevier, vol. 80(1), pages 160-178, June.
  26. 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.
  27. 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.
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