 Inputs, networks and quality-upgrading: Evidence from China in IndiaAlexander Copestake and Wenzhang Zhang China Economic Review, 2023, vol. 77, issue C Abstract: This paper exploits China's accession to the WTO to investigate the impact of a supply shock on quality across the Indian production network. After controlling for increased import competition, including in downstream and third-country markets, and for new export opportunities, we find that a fall in input tariffs raises revenue, quality and prices, whilst lowering quality-adjusted prices and the probability of product exit – consistent with a simple model of multi-product manufacturers gaining access to higher-quality components. Upgrading persists for at least ten years; at the peak in 2010, products with a 10% higher pre-accession input tariff, and hence a larger post-accession fall in tariffs, have 5.3% higher quality. This in turn raises quality further down the supply chain, with input-output linkages amplifying the one-step effect by up to 75%. These results highlight a potential beneficial impact of the “China shock” in developing countries, namely supply-driven quality upgrading. Keywords: Quality; Production networks; International trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:77:y:2023:i:c:s1043951x22001493 DOI: 10.1016/j.chieco.2022.101891 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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