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Within-product specialization: export performance of Brazil and China in vertically differentiated varieties

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Author(s):
Samantha Ferreira e Cunha
Total Authors: 1
Document type: Doctoral Thesis
Press: Campinas, SP.
Institution: Universidade Estadual de Campinas (UNICAMP). Instituto de Economia
Defense date:
Examining board members:
Célio Hiratuka; Marta dos Reis Castilho; Clesio Lourenço Xavier; Rodrigo Coelho Sabbatini; Fernando Sarti
Advisor: Célio Hiratuka
Abstract

Recent studies, using highly detailed commodity classifications, have found large price differences among exporting countries, considering the same product and destination market. The idea that trade specialization occurs within product, along varieties, was established. Originally, varieties are goods under the same code but sold with different unit values (vertical product differentiation). The literature has emerged in developed countries, worried about the effects of competition with the varieties of low-wage countries. This new approach to trade specialization is the starting point for discussing a topic of great appeal in the current scenario of competition with Chinese products in third markets. This study aims to contribute to the discussions on that topic, investigating the importance of trade in vertically differentiated products in characterizing the patterns of trade specialization of Brazil in comparison with China, considering the main destination markets of Brazilian manufactures (LAIA, MERCOSUR and NAFTA). The analysis uses directly the unit values of trade flows to infer the relative quality of exported products between Brazil and China. Alternatively, by means of a regression equation with panel data, it uses price and quantity data to estimate the influence of the quality margin in the growth of exports for each selected destination market. The period of analysis comprises the years 2001 to 2010; the data are made available by a new international trade database, BACI. In general, the results show that Brazil has better resisted to the competition with Chinese products in the medium and upper segments of the market, because those were the segments in which Brazil has expanded its share (up to 10.0 percentage points); the observed results hold among different industries and selected destination markets. Considering the importance of the quality margin in the growth of exports, the results showed that there are differences between exporting countries regarding the quality of exports in the different destination markets; countries with higher per capita income export larger quantities, with prices up to 12% higher. This means that there is room for developing countries to raise the quality of their exports, and this should complement the efforts of export diversification (AU)

FAPESP's process: 10/10957-2 - Intra-Product Trade Specialization: Export Performance of Brazil and China in Vertically Differentiated Varieties
Grantee:Samantha Ferreira e Cunha
Support Opportunities: Scholarships in Brazil - Doctorate