Does Tougher Import Competition Foster Product Quality Upgrading?

Fernandes, Ana M. ; Paunov, Caroline

关键词: ADVERTISING;    ALTERNATIVE TRANSPORT;    AUTOMOBILE;    AUTOMOBILE INDUSTRY;    AUTOMOBILES;   

DOI  :  10.1596/1813-9450-4894
RP-ID  :  WPS4894

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Over the past two decades,globalization, and more specifically the increased exposureto competition from low-price producers in China and India,has created a new economic environment for other emergingeconomies. The most advantageous way for manufacturing firmsin those economies to position themselves in domestic andinternational markets is to offer upgraded anddifferentiated rather than "mundane"labor-intensive products. This paper investigates whetherincreased competitive pressure from imports forces firms toimprove the quality of their products. The econometricanalysis relies on a rich dataset of Chilean manufacturingplants and their products. Product quality is measured withunit values (average prices) and industry-level transportcosts are used as an exogenous measure of importcompetition. The authors find a positive and robust effectof import competition on product quality. This effect isfound to be particularly strong for non-exporting plants.The results also show that increased import competition fromless advanced economies is the major cause for the positiveimpact on quality upgrading. The overall evidence points tothe benefits of trade openness for product innovation butdemonstrates at the same time that competitive pressurealone will not enable local plants to catch up with leadingworld producers.