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Quality upgrading of Italian manufactures: evidence from firms� prices and strategies

Author

Listed:
  • Valter Di Giacinto

    () (Bank of Italy, Regional Economic Research Unit, L�Aquila Branch)

  • Giacinto Micucci

    () (Bank of Italy, Regional Economic Research Unit, Ancona Branch)

Abstract

Even before the global crisis, the Italian economy was in difficulties internationally, but slow growth and a declining share of world trade were accompanied by a perceptible process of manufacturing transformation. This paper, using data from the Bank of Italy�s survey of manufacturers, measures a crucial aspect of the transformation, namely quality upgrading, from 2000 to 2006. The gauge of upgrading, not used in earlier literature, is the portion of price changes representing the return to value creation, both tangible (new products and improvement of existing ones) and intangible (branding policies). We find evidence of upgrading capable of explaining a quarter of the firms� average annual price increases (about 0.5 out of 2 percentage points), with roughly equal effects from the tangible and the intangible components. The analysis also shows that strategies of product upgrading helped foster job creation and sales growth.

Suggested Citation

  • Valter Di Giacinto & Giacinto Micucci, 2011. "Quality upgrading of Italian manufactures: evidence from firms� prices and strategies," Temi di discussione (Economic working papers) 804, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_804_11
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2011/2011-0804/en_tema_804.pdf
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    More about this item

    Keywords

    upgrading; product quality; firm strategies;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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