Direction, Extension and Price of Exports’ Quality

We examine some issues related to trade in produc quality, based on evidence of Brazil's exports in 1995, 2005, and 2014, with goods classified according to the Rauch's (1999) list (4-digits SITC Rev. 2) of differentiated goods, reference-priced goods, and organized-exchange goods. We mainly focus on differentiated goods, whose unit values variations can be more definitely connected with quality variation. We start with some exploratory statistical analysis around the extensive market and good's margins, which helps to highlight the main determinant of market entry. With the help of a richly devised graphic, we manage to highlight both the role of GDP per capita, as well as of a network-adjusted distance variable. In the same sense, with the help of a step-plot, we could outline how product quality is associated with ampler extension of markets. All analyses on the quality margins are based on regression models, starting with a demand-structured quality model, which confirms all major finding of the previous data visualization. The positive coeficiente of distance is worth emphasizing, showing that high-quality product, which is proxied by unit value (UV), reach more distant markets. But the best stastical model is our attempted demand and supply structured model, which takes substituting UV by RUV, relative unit value. All main exploratory variables becomes statistically signficant, begining with the negative coeficient of importing market size, which further help to untangle this variable from GDP per capita, which is related to consumer's characteristics. Most importantly, both supply-side variable, built on 3-digits level classification, have positive coefficients. In the case of RCA, it refers us to a stabilished argument in the multi-product firm literature: that the supplier has higher quality competition in its core-competence área.