Are Unit Export Values Correct Measures of the Exports' Quality?

Wojciech Grabowski and Krzysztof Szczygielski

No 393, CASE Network Studies and Analyses from CASE-Center for Social and Economic Research

Abstract: It has become common to measure the quality of exports using their unit export value (UEV). Applications of this method include studies of intra-industry trade (IIT) and analyses of industrial 'competitiveness'. This literature seems to assume that export quality and export price (the most natural interpretation of UEV) are not merely correlated but that they follow each other one-for-one. We put this assumption under scrutiny from both a theoretical and empirical point of view. In terms of theory, we formalize this assumption as a hypothesis of the proportionality of equilibrium prices and equilibrium qualities. We discuss several cases for which this hypothesis is theoretically doubtful (non-linear utility- and cost functions; strong and asymmetric horizontal product differentiation). We also suggest two methods of verifying the hypothesis for cases in which it cannot be easily rejected theoretically. These two methods are then applied to German imports in the period of 1994-2006. We find that the implications of the proportionality hypothesis are largely contradicted by the data.

Keywords: export quality; unit export value; intra-industry trade; competitiveness (search for similar items in EconPapers)
JEL-codes: F10 F12 F14 (search for similar items in EconPapers)
Pages: 27 Pages
Date: 2009
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Journal Article: Are unit export values correct measures of the exports’ quality? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:sec:cnstan:0393

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