The Quality and Variety of a Nation's Exports

Using 1990 data on U.S. imports from 119 countries in 14,572 product categories, we find that richer countries and countries with more workers export to the U.S. in many more categories. Within categories, richer countries export modestly fewer units at considerably higher unit prices, suggesting they are exporting higher quality products. If exports to the U.S. are representative of exporter production, then the estimates imply that one-half of country differences in income per worker arise from differences in the quality of goods produced. We find further that countries with more workers export greater quantities per category at no lower unit prices. This last finding coincides with Krugman-style models of differentiated products subject to fixed costs of production, and appears inconsistent with Armington-style models with a fixed number of country-specific varieties.