| ID | 192421 |
| Title Proper | Inputs, networks and quality-upgrading |
| Other Title Information | evidence from China in India |
| Language | ENG |
| Author | Copestake, Alexander |
| Summary / Abstract (Note) | This paper exploits China's accession to the WTO to investigate the impact of a supply shock on quality across the Indian production network. After controlling for increased import competition, including in downstream and third-country markets, and for new export opportunities, we find that a fall in input tariffs raises revenue, quality and prices, whilst lowering quality-adjusted prices and the probability of product exit – consistent with a simple model of multi-product manufacturers gaining access to higher-quality components. Upgrading persists for at least ten years; at the peak in 2010, products with a 10% higher pre-accession input tariff, and hence a larger post-accession fall in tariffs, have 5.3% higher quality. This in turn raises quality further down the supply chain, with input-output linkages amplifying the one-step effect by up to 75%. These results highlight a potential beneficial impact of the “China shock” in developing countries, namely supply-driven quality upgrading. |
| `In' analytical Note | China Economic Review Vol. 77, Feb 2023: p.101891 |
| Journal Source | China Economic Review 2023-02 77 |
| Key Words | International Trade ; Quality ; Production Networks |