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The Dynamics of Product Quality and International Competitiveness
Author:
Mr. Ashoka Mody null

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Ms. Deniz O Igan
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https://orcid.org/0000-0002-9501-1807
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Ms. Stefania Fabrizio
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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 097
Language:
English
Publication Date:
01 Apr 2007
DOI:
https://doi.org/10.5089/9781451866612.001
ISBN:
9781451866612
ISSN:
1018-5941
Pages:
33
Keywords:
WP; product quality; export share; market share gain; unit value; quality products
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund