and the weighting of each sector by its share of the country’s total export basket, we can calculate country-level quality gaps.
Figure 3 Unit Value Gaps, 1998-2000 Average (Percentage) 350 300 250 200 150 100 50
Venezuela
Argentina
Brazil
Bolovia
Colombia
Peru
Ecuador
East Asia & Paciric
Europe & Central Asia
Middle East & North Africa
South Asia
Latin America & Caribbean
Africa
0
Source: Author’s calculations using Hwang (2006), for only Rauch-differentiated goods. Gaps for the six regions are median values.
This figure shows that as of the end of the 1990s, Ecuador had the lowest exportweighted unit value gap among regional comparators. In fact, the space to upgrade quality within existing export activities was even lower than the median value in Sub-Saharan Africa, which is the region with the lowest unit value gaps in the world. This means that Ecuador’s non-oil exports fetch a price per unit comparable to the highest unit prices in the world in those goods, which suggests that the dimension of export growth through improving quality in existing sectors does not hold much promise. Instead, new activities will likely have to emerge. The following section examines Ecuador’s record of transforming its structure of production towards newer, more sophisticated sectors.
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