46
Module 1: Trade Outcomes Analysis
Module 1
Figure 1.18. Decomposition of Export Growth across Key Products, Mongolia, 2002–07
50%
0.6%
5.9%
0.7%
1.5%
41.6% 42%
40%
share of exports
30%
30% 25%
12.0%
39%
30%
23%
20%
15% 16%
10%
6%
2%
1%
1%
0%
–1%
–3% –4%
–10% –12% –20% –30%
–22% –29% meat
cashmere dehaired
cashmere garments export value
textiles units
copper concentrate
gold
value/unit
Source: Authors.
which prices are more dependent on producer competitiveness, Mongolia has experienced substantial declines in the unit value of production, suggesting poor quality competitiveness. Analyzing data on unit prices of important export products against key competitors can provide a valuable assessment of the trends in a country’s quality competitiveness. We rely on the COMEXT database from EUROSTAT to characterize the relative unit values of import in each EU member country. As in Schott (2004), unit values were calculated simply as the quotient of general import values and quantities. Within any product (eight-digit Combined Nomenclature code) for any given year, we then have a distribution of unit values of imports from the different source countries. For each good i and exporting country c, in time year t, we generate a measure of relative quality R as follows: uv Ritc = itc uv it90
Figure 1.19. Analysis of Indonesia’s Unit Price Trends for Top Five Garment Exports to the European Union Relative to Main Competitor, 1988–2008 25 20 15 10 5 0 1988
1993 Bangladesh Malaysia
1998 China Thailand
2003
2008
Indonesia Vietnam
Source: Authors.
(1.9)
Where uitc denotes the unit value of the good and uit90 denotes the value at the 90th percentile of the unit value distribution across countries for that product. Ritc denotes the relative quality of the country’s export of that good, that is, quality relative to other countries exporting the same good. Figure 1.19, for example, shows price per unit trends for Indonesia’s top five garment export products to Europe, against its main competitors. In this case, it high-
lights the fact that Indonesia might be getting caught in the middle in terms of competition in garment export markets—it struggles to compete on price with low-cost producers like Bangladesh and China, but it is not yet able to reach the quality levels of Malaysia and Thailand. Using data on unit prices it is also possible to develop analyses of quality ladders, measuring the relative quality of a country’s exports against all other countries that export a specific product (worldwide or to a specific