Does tougher import competition foster product quality upgrading ?
By: Ana M. Fernandes, Caroline Paunov.
Contributors: Paunov, Caroline.; World Bank.
Series: Policy research working paper -- 4894; Policy research working papers (Online) -- 4894.
Publisher: World Bank
Published: 2009
Place of publication: [Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Foreign trade regulation. -- Chile; Economics -- Chile
Description: "Over the past two decades, globalization, and more specifically the increased exposure to competition from low-price producers in China and India, has created a new economic environment for other emerging economies.  The most advantageous way for manufacturing firms in those economies to position themselves in domestic and international markets is to offer upgraded and differentiated rather than "mundane" labor-intensive products.  This paper investigates whether increased competitive pressure from imports forces firms to improve the quality of their products.  The econometric analysis relies on a rich dataset of Chilean manufacturing plants and their products.  Product quality is measured with unit values (average prices) and industry-level transport costs are used as an exogenous measure of import competition.  The authors find a positive and robust effect of import competition on product quality.  This effect is found to be particularly strong for non-exporting plants.  The results also show that increased import competition from less advanced economies is the major cause for the positive impact on quality upgrading.  The overall evidence points to the benefits of trade openness for product innovation but demonstrates at the same time that competitive pressure alone will not enable local plants to catch up with leading world producers. "--World Bank web site.
Notes: Title from PDF file as viewed on 5/7/2009.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.