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Price and quality competitiveness of socialist countries'exports

Author

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  • Drabek, Zdenek
  • Olechowski, Andrzej

Abstract

In this report the authors have analyzed pricing of the centrally planned economies (CPEs) in the highly competitive export markets of the EC countries in the first half of the 1980s. They found that the CPEs'export prices were lower than prices in both developed and developing countries. Manufactured goods from CPEs were underpriced an average 31 to 45 percent - even more on some commodities. Protection of EC countries doesn't seem to be a factor in CPE underpricing of manufactured goods. This could not be explained either by a deliberate policy of CPEs to penetrate Western markets. The CPEs inability to upgrade manufactured exports that are subject to quotas suggests serious quality constraints on exports of manufactured goods. They appear to underprice their manufactured exports not because of cost advantages that make them more competitive, but because most of their manufactured goods are inferior in quality to their competitors.

Suggested Citation

  • Drabek, Zdenek & Olechowski, Andrzej, 1989. "Price and quality competitiveness of socialist countries'exports," Policy Research Working Paper Series 317, The World Bank.
    • Handle: RePEc:wbk:wbrwps:317
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    References listed on IDEAS

    as
    1. Aw, Bee Yan & Roberts, Mark J., 1986. "Measuring quality change in quota-constrained import markets: The Case of U.S. Footwear," Journal of International Economics, Elsevier, vol. 21(1-2), pages 45-60, August.
    2. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    3. Falvey, Rodney E, 1979. "The Composition of Trade within Import-restricted Product Categories," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1105-1114, October.
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