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Import Competition and Quality Upgrading

Mary Amiti () and Amit Khandelwal

No 15503, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: It is important to understand the factors that influence a country's 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 in 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.

JEL-codes: F1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ind and nep-int
Date: 2009-11
Note: ITI
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Published as Mary Amiti & Amit K. Khandelwal, 2013. "Import Competition and Quality Upgrading," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 476-490, May.

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