Import Competition and Quality Upgrading

34 Pages Posted: 17 Nov 2009 Last revised: 29 Oct 2014

See all articles by Mary Amiti

Mary Amiti

Federal Reserve Bank of New York

Amit Khandelwal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD)

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Date Written: November 2009

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.

Suggested Citation

Amiti, Mary and Khandelwal, Amit Kumar, Import Competition and Quality Upgrading (November 2009). NBER Working Paper No. w15503. Available at SSRN: https://ssrn.com/abstract=1505827

Mary Amiti

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Amit Kumar Khandelwal (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

HOME PAGE: http://www0.gsb.columbia.edu/faculty/akhandelwal/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/amit_khandelwal

Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
Durham, NC 90097
United States

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