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Destination and source countries: Do they have a role on product quality?

Author

Listed:
  • Adriana Peluffo

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

  • Juan Ignacio Scasso

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)

Abstract

In this work we explore the link between export and import products quality and the level of income of destination and source countries. As proxy to quality we use a firm-level measure calculated from the unit value prices of both exports and imports of Uruguayan manufacturing firms. Previous works argue that high quality products are exported to and imported from high income countries. Moreover, it is also argued that firms that export to high income countries upgrade their quality by using imports from high income countries. We test these hypotheses using a rich database for Uruguay over the period 1997-2008. This dataset combines firm level data and detailed customs data of exports and imports by destination or origin country. To analyze causal associations we use instrumental variable techniques, and utilize real exchange rate fluctuation to construct the instruments. Our results show that exporting to high income countries has a negative effect on the quality of imported goods and that importing from high income countries has a positive effect on our measure of import quality.

Suggested Citation

  • Adriana Peluffo & Juan Ignacio Scasso, 2016. "Destination and source countries: Do they have a role on product quality?," Documentos de Trabajo (working papers) 16-10, Instituto de Economía - IECON.
    • Handle: RePEc:ulr:wpaper:dt-10-16
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    File URL: https://hdl.handle.net/20.500.12008/8371
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    References listed on IDEAS

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    Cited by:

    1. Bastos, Paulo & Silva, Joana, 2010. "The quality of a firm's exports: Where you export to matters," Journal of International Economics, Elsevier, vol. 82(2), pages 99-111, November.
    2. Paulo Bastos & Joana Silva & Eric Verhoogen, 2018. "Export Destinations and Input Prices," American Economic Review, American Economic Association, vol. 108(2), pages 353-392, February.
    3. Peluffo Adriana & Scasso Juan, 2023. "The Role of Trade Partners on Product Quality: The case of Uruguay," Asociación Argentina de Economía Política: Working Papers 4681, Asociación Argentina de Economía Política.

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    More about this item

    Keywords

    exports; imports; quality; international trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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