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Does Input Sector Liberalization Promote Quality Innovation and Exports?

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  • Rajat Acharyya
  • Swapnendu Bandyopadhyay(Banerjee)

Abstract

This paper examines the relationship between input sector liberalization and product quality innovation and export orientation by a LDC firm given the complementarity between high input quality and high product quality. We show that input sector liberalization per se may not induce quality innovation and outward orientation. In fact in some situations ceteris paribus input sector liberalization may increase the odds in favour of low quality production. We show that total output sector liberalization, or surprisingly, a suitable degree of output sector protection then is needed to be combined with input sector liberalization so that quality innovation is induced.

Suggested Citation

  • Rajat Acharyya & Swapnendu Bandyopadhyay(Banerjee), 2004. "Does Input Sector Liberalization Promote Quality Innovation and Exports?," Econometric Society 2004 Far Eastern Meetings 650, Econometric Society.
    • Handle: RePEc:ecm:feam04:650
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    References listed on IDEAS

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    8. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Acharyya, Rajat & García-Alonso, María D.C., 2012. "Income based price subsidies and parallel imports," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 25-41.
    2. Anwar, Sajid & Sun, Sizhong, 2018. "Foreign direct investment and export quality upgrading in China's manufacturing sector," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 289-298.
    3. Rajat Acharyya & Prabal Roy Chowdhury, 2006. "Innovation incentives in an intergrated marketed with vertical product differentiation," Discussion Papers 06-02, Indian Statistical Institute, Delhi.
    4. Jin Sun, 2021. "Do Higher‐Quality Regional Trade Agreements Improve the Quality of Export Products from China to “One‐Belt One‐Road” Countries?," Asian Economic Journal, East Asian Economic Association, vol. 35(2), pages 142-165, June.
    5. Acharyya, Rajat & Banerjee, Swapnendu, 2012. "On tariff and quality innovation in a market with discrete preferences," Economic Modelling, Elsevier, vol. 29(3), pages 917-925.

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    More about this item

    Keywords

    Input sector liberalization; Product quality innovation; Export Orientation.;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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