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This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values (prices) and imports’ transport costs are used as an exogenous proxy for import competition. The estimates show a negative effect of transport costs on product quality. The paper provides explicit evidence that estimated increases in unit values capture product quality upgrading, and that competition effects of imports explain our results. Easier access to intermediate inputs also fosters quality upgrading.

Development

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This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values (prices) and imports’ transport costs are used as an exogenous proxy for import competition. The estimates show a negative effect of transport costs on product quality. The paper provides explicit evidence that estimated increases in unit values capture product quality upgrading, and that competition effects of imports explain our results. Easier access to intermediate inputs also fosters quality upgrading.

Development

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"The author studies the determinants of total factor productivity (TFP) for manufacturing firms in Bangladesh using data from a recent survey. She obtains TFP measures by making use of firm-specific deflators for output and inputs. Controlling for industry, location, and year fixed effects, she finds that: (1) firm size and TFP are negatively correlated; (2) firm age and TFP exhibit an inverse-U shaped relationship; (3) TFP improves with the quality of the firm's human capital; (4) global integration improves TFP; (5) firms with research and development activities and quality certifications have higher TFP, while more advanced technologies improve TFP only in the presence of significant absorptive capacity; (6) power supply problems cost firms heavily in terms of TFP losses; and (7) the presence of crime dampens TFP. "--World Bank web site.

Industrial productivity

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"The authors analyze the role of international technological diffusion for firm-level technological innovations in several developing countries. Their findings show that, after controlling for firm, industry, and country characteristics, exporting and importing activities are important channels for the diffusion of technology. They also find evidence that the majority of foreign-owned firms are significantly less likely to engage in technological innovations than minority foreign-owned firms or domestic-owned firms. The authors interpret this finding as evidence that the technology transferred from multinational parents to majority-owned subsidiaries is more mature than that transferred to minority-owned subsidiaries. This finding supports the idea that equity joint ventures maximize technology transfers to local firms. "--World Bank web site.

Free trade --- Technological innovations --- Technology transfer --- Economic aspects

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"Professional skills are scarce in Mozambique, even by the standards of low-income countries. The solution, however, is not necessarily to create more Mozambican training institutions but to address market-specific problems. Where skills are already the binding constraint (for example, in auditing and engineering), policy action is indeed needed to remedy supply-side problems: capital market imperfections that inhibit investment in training institutions by entrepreneurs and in education by individuals; weakness in upstream school education, which handicaps Mozambican students in their pursuit of higher education; inadequacies in professional education and training, including curricula not attuned to industry needs; and a fragmentation of the regional education market by regulatory and language differences that prevent the emergence of regional institutions that can exploit economies of scale.Where skills may be limited but are not yet the binding constraint, the priority is to stimulate demand for appropriate skills. In this respect, the emergence of professional guilds offers opportunities, but also creates risks. The guilds can design, with government support, a regulatory framework, for example, in accounting and basic engineering, which is more attuned to the needs of Mozambican firms. They can also help make firms more aware of the benefits of professional help, for example, in accounting and information technology. The risk is that guilds will create unnecessary regulatory barriers to entry, particularly for foreign or foreign-trained professionals. Greater coherence between policies affecting professional services and international migration policy can help deal with both supply-side and demand-side problems. "--World Bank web site.

Professional education --- Professions