Quality Upgrading and the Stages of Diversification
32 Pages Posted: 4 Apr 2017
Date Written: April 4, 2017
This paper explores the contribution of product quality upgrading in the process of export diversification. To do this, the paper builds a multisector model following Eaton and Kortum (2002) in which product quality is incorporated as a key feature. The model is then calibrated to generate predictions about the degree of export diversification in a number of East Asian countries. It is shown that quality upgrading is a key factor to understand the changes in the degree of export diversification in the majority of countries in our sample.
Keywords: export diversification, product quality, international trade, structural transformation
JEL Classification: O14, O40, F10
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