Quality upgrading of Italian manufactures: evidence from firms� prices and strategies

Valter Di Giacinto and Giacinto Micucci ()
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Giacinto Micucci: Bank of Italy, Regional Economic Research Unit, Ancona Branch

No 804, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Even before the global crisis, the Italian economy was in difficulties internationally, but slow growth and a declining share of world trade were accompanied by a perceptible process of manufacturing transformation. This paper, using data from the Bank of Italy�s survey of manufacturers, measures a crucial aspect of the transformation, namely quality upgrading, from 2000 to 2006. The gauge of upgrading, not used in earlier literature, is the portion of price changes representing the return to value creation, both tangible (new products and improvement of existing ones) and intangible (branding policies). We find evidence of upgrading capable of explaining a quarter of the firms� average annual price increases (about 0.5 out of 2 percentage points), with roughly equal effects from the tangible and the intangible components. The analysis also shows that strategies of product upgrading helped foster job creation and sales growth.

Keywords: upgrading; product quality; firm strategies (search for similar items in EconPapers)
JEL-codes: L11 L15 L60 M30 (search for similar items in EconPapers)
Date: 2011-04
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_804_11

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