Quality Selection, Sectoral Heterogeneity and Chinese Exports

Abstract

Recent models of international trade have identified product quality as an important determinant of bilateral trade flows. In this paper we examine the relationship between the characteristics of the export market and the aggregate quality of products using Chinese data. We find evidence that product unit values vary with standard gravity variables in a different manner across sectors of the Chinese economy and run contrary to earlier findings for the USA. These results are not compatible with existing heterogeneous firm trade models with constant mark-up and the extension to include product quality. We construct a heterogeneous firm trade model with quality differences and spatial price discrimination, and show that the model provides plausible explanations for our empirical finds as well as other existing findings in the literature.

An analysis of the interrelationship among trade openness, institutional quality and economic growth: Empirical evidence from Pakistan

“…Trade liberalization impacts the output through exports, investment, and imports (Khan & Ahmed, 2012). Kneller & Yu (2016) found that economic growth increases 1.6% per capita over 10 years due to trade openness. found results which show that GDP increases by 1.62 % as a consequence of 1 % increase in trade openness.…”

Information accessibility and export quality: Evidence from China

“…Product quality is an important determinant of international trade flows, and exerts a significant influence on a nation's position in global supply chains (Baldwin & Harrigan, 2011; Fieler et al, 2018; Hallak, 2006; Kneller & Yu, 2016). A growing body of research has investigated the determinants of export quality from the perspective of trade policies and market conditions, such as trade liberalization (Amiti & Konings, 2007; Fieler et al, 2018), international acquisitions (Stiebale & Vencappa, 2018), labor mobility (Ariu, 2022; Zhou & Zhang, 2021), the income level of destination markets (Bastos & Silva, 2010; Hallak, 2006), and institutional reforms (Li et al, 2021; Li et al, 2022).…”

“…First, it adds to the study on the determinants of export quality. For the internal factors that may affect export quality, previous studies have shown the effects of input quality, input variety, and productivity heterogeneity on export quality (Baldwin & Harrigan, 2011; Hallak & Sivadasan, 2013; Johnson, 2012; Kneller & Yu, 2016; Kugler & Verhoogen, 2012; Melitz, 2003; Verhoogen, 2008). For the external environment, the existing literature have documented that the income level of export destinations, trade liberalization, and other institutional reforms could play an important role in affecting export quality (Bas & Strauss‐Kahn, 2015; Bastos & Silva, 2010; Fan et al, 2018; Fieler et al, 2018; Hallak, 2006; Li et al, 2021; Li et al, 2022; Sutton, 2007).…”

Entrepreneurship and Export Product Quality Improvement

“…Meanwhile, product quality is a key factor in international trade activities and determines the position of a country or region in the global supply chain [9,10]. We should fully understand and appreciate the profound connotation and significance of the theme of promoting high-quality economic development and take it as our responsibility to promote high-quality economic development.…”