## The Dynamics of Product Quality and International Competitiveness

_IMF Working Papers, April 1, 2007_

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## Bibliographic details
- Authors: Ashoka Mody, Deniz O Igan, Stefania Fabrizio
- Published: April 1, 2007
- Series: IMF Working Papers

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### Overview
- Title: The Dynamics of Product Quality and International Competitiveness
- Authors: Ashoka Mody, Deniz O Igan, Stefania Fabrizio
- Date: April 1, 2007
- Core question: How did the eight Central and Eastern European countries (the CEE-8) achieve a decade of impressive export growth despite appreciation of the exchange rate, and will the factors behind that growth persist?

### Key findings
- Despite exchange rate appreciation, the CEE-8 (the eight Central and Eastern European countries that entered the European Union in May 2004) achieved a decade of impressive export growth and expanded significantly their shares of world markets.
- Building from data at the six-digit level of disaggregation, the CEE-8 made an impressive shift in product quality and in the technological intensity of exports.
- The structural transformation toward higher-quality and more technologically intensive exports was associated with increased market share.
- The analysis strongly suggests that, in international markets, countries benefit from higher product quality.
- While structural transformation materially raised market shares, the paper concludes that the easy gains from this process may be over.

### Methodology and data
- Data granularity: six-digit level of disaggregation.
- Focus: shifts in product quality and technological intensity of exports, and their association with market share changes.
- Subject tags used by the paper: Export performance, Exports, Real effective exchange rates, Real exchange rates, Technology.
- Keywords: export share, market share gain, product quality, quality products, unit value, WP.

### Implications for competitiveness and policy
- Product quality improvements and a shift toward higher technological intensity can compensate for adverse real exchange rate developments in supporting export performance.
- Structural transformation into higher-quality, higher-tech exports is a key driver of market share gains.
- Cautionary implication: the easy gains from structural transformation may have been exhausted, implying that sustaining export growth may require additional sources of competitiveness beyond past shifts in product quality.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-dynamics-of-product-quality-and-international-competitiveness-20647_