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The Quality and Variety of Exports from New EU Member States: Evidence from Very Disaggregated Data

Author

Listed:
  • Konstantins Benkovskis

    (Bank of Latvia)

  • Ramune Rimgailaite

    (Bank of Latvia)

Abstract

According to trade theories, the average quantity of exported goods is not the only parameter of export performance – the variety and quality of exports also play an important role. The goal of this paper is to evaluate the variety and quality of exports from the new EU Member States Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia (NMS) in 1999–2009. The analysis is done on the basis of methodology proposed by R. C. Feenstra (1994) and further developed by D. Hummels and P. Klenow (2005), and Ch. Broda and D. E. Weinstein (2006). Although unit values play an important role in defining export quality, the calculations herein take into account also market shares and the level of monopoly power of firms in a particular market. In addition, this study contributes to the existing literature by providing a different way of evaluating the variety assuming that the number of exported brands follows the Poisson distribution. The calculations show that exports from NMSs in 2009 were of lower quality in comparison with German exports: relative quality was ranging between 0.30 and 0.55. It was found that all NMSs significantly increased their average number of brands exported to the EU market; moreover, all NMSs were able to increase the average quality of their exports during the 10-year reference period. Finally, relative quality is much more stable than relative prices, providing evidence that the measure of relative quality developed herein is better than the traditional proxy, i.e. relative export prices, as it does not include relative costs of production but reflects structural factors.

Suggested Citation

  • 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.
  • Handle: RePEc:ltv:wpaper:201002
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    References listed on IDEAS

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    Cited by:

    1. Andreas Kappeler, 2015. "Estonia: Raising Productivity and Benefitting more from Openness," OECD Economics Department Working Papers 1215, OECD Publishing.
    2. repec:zbw:bofitp:2012_023 is not listed on IDEAS
    3. ., 2012. "Competition in the EU-15 market: CESEE, China and Russia," Chapters, in: Ewald Nowotny & Peter Mooslechner & Doris Ritzberger-Grünwald (ed.), European Integration in a Global Economy, chapter 10, pages 91-105, Edward Elgar Publishing.
    4. Eleonora Cavallaro & Piero Esposito & Alessia Matano & Marcella Mulino, 2013. "Technological Catching Up, Quality of Exports, and Competitiveness: A Sectoral Perspective," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(6), pages 4-21, November.
    5. Konstantins Benkovskis & Julia Wörz, 2014. "How does taste and quality impact on import prices?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(4), pages 665-691, November.
    6. Andrea Ciani, 2021. "Income inequality and the quality of imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 375-416, May.
    7. Konstantins Benkovskis & Julia Woerz, 2012. "Evaluation of Non-price Competitiveness of Exports from Central, Eastern and Southeastern European Countries in the EU Market," Working Papers 2012/01, Latvijas Banka.
    8. Christian Schitter & Maria Silgoner & Katharina Steiner & Julia Wörz, 2012. "Fishing in the same pool: Export strengths and competitiveness of China and CESEE at the EU-15 Market," FIW Working Paper series 096, FIW.
    9. Konstantins Benkovskis & Julia Wörz, 2012. "Non-Price Competitiveness Gains of Central, Eastern and Southeastern European Countries in the EU Market," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 27-47.
    10. Gabor Pula & Daniel Santabárbara, 2012. "Is china climbing up the quality ladder?," Working Papers 1209, Banco de España.
    11. Konstantīns Beņkovskis, 2012. "Competitiveness of Latvia's exporters," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 17-45, December.
    12. Francesco Di Comite, 2012. "Measuring quality and non-cost competitiveness at a country-product level," European Economy - Economic Papers 2008 - 2015 467, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    13. Georgescu Vladimir, 2014. "Patterns in Trade in Selected European Union Countries," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 125-130, May.
    14. Kamila Kuziemska-Pawlak & Jakub Mućk, 2022. "Global Value Chains and Equilibrium Exchange Rate: Evidence from Central European Economies," NBP Working Papers 354, Narodowy Bank Polski.
    15. Kancs, d'Artis & Persyn, Damiaan, 2019. "Welfare Gains from the Variety Growth," Conference papers 333020, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Gabor Pula & Daniel Santabárbara, 2012. "Is china climbing up the quality ladder?," Working Papers 1209, Banco de España.
    17. David Aristei & Davide Castellani & Chiara Franco, 2013. "Firms’ exporting and importing activities: is there a two-way relationship?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(1), pages 55-84, March.
    18. repec:hhs:bofitp:2012_023 is not listed on IDEAS
    19. Konstantins Benkovskis & Julia Wörz, 2011. "How Does Quality Impact on Import Prices?," Working Papers 175, Oesterreichische Nationalbank (Austrian Central Bank).
    20. Wörz, Julia & Benkovskis, Konstantins & Silgoner, Maria & Steiner, Katharina, 2013. "Crowding-out or co-existence? the competitive position of EU members and China in global merchandise trade," Working Paper Series 1617, European Central Bank.

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    More about this item

    Keywords

    new EU Member States; exports; quality; variety;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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