Import Competition and Quality UpgradingCoauthor(s): Mary Amiti.
It is important to understand the factors that influence a countrys transition from the production of low-quality to high-quality products since the production of high-quality goods is often viewed as a pre-condition for export success and, ultimately, for economic development. In this paper, we provide the first evidence that countries import tariffs affect the rate at which they upgrade the quality of their products. We analyze the effect of import competition on quality upgrading using highly disaggregated export data to the U.S. from fifty-six countries and 10,000 products using a novel approach to measure quality. As predicted by recent distance to the frontier models, we find that lower tariffs are associated with quality upgrading for products close to the world quality frontier, whereas lower tariffs discourage quality upgrading for products distant from the frontier.
The PDF above is a preprint, or manuscript version, of an article accepted for publication in The Review of Economics and Statistics.
Source: The Review of Economics and Statistics
Amiti, Mary, and Amit Khandelwal. "Import Competition and Quality Upgrading." The Review of Economics and Statistics (forthcoming).