The Dynamics of Product Quality and International Competitiveness

35 Pages Posted: 29 Apr 2007

See all articles by S. Fabrizio

S. Fabrizio

International Monetary Fund (IMF)

Deniz Igan

International Monetary Fund (IMF) - Financial Studies Division

Ashoka Mody

International Monetary Fund (IMF) - Research Department

Date Written: April 2007

Abstract

Despite the appreciation of the exchange rate, the eight Central and Eastern European countries (the CEE-8) that entered the European Union in May 2004 have achieved a decade of impressive export growth, expanding significantly their shares of world markets. Does this mean that the real exchange rate is irrelevant? If not, what other factors compensated for the appreciation to explain the apparently strong competitiveness of these economies? And will these favorable factors continue to power export growth? This paper places in international context the achievements of the CEE-8 and helps more broadly to identify the determinants of international competitiveness. Building from data at the six-digit level of disaggregation, it shows that the CEE-8 made an impressive shift in product quality and in the technological intensity of exports, and that these shifts associated with the structural transformation were also associated with increased market share. The analysis strongly suggests that, when trading in international markets, countries benefit from higher product quality. However, while the structural transformation achieved was valuable in raising market shares, the easy gains from this process may be over.

JEL Classification: F12, F14, O39

Suggested Citation

Fabrizio, Stefania and Igan, Deniz and Mody, Ashoka, The Dynamics of Product Quality and International Competitiveness (April 2007). IMF Working Papers, Vol. , pp. 1-33, 2007. Available at SSRN: https://ssrn.com/abstract=983283

Stefania Fabrizio

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Deniz Igan

International Monetary Fund (IMF) - Financial Studies Division ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ashoka Mody (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-9617 (Phone)
202-589-9617 (Fax)

HOME PAGE: http://www.amody.com

Register to save articles to
your library

Register

Paper statistics

Downloads
318
Abstract Views
1,471
rank
94,517
PlumX Metrics