Working Paper: NBER ID: w2722
Authors: Dani Rodrik
Abstract: The central focus of this paper is on the relationship between domestic market structure and export performance. It evaluates the hypothesis that more concentrated industrial sectors can achieve more easily the transition from standardized, labor-intensive manufactures to sophisticated, skill intensive products, as such industries are better able to cope with the inevitable reputational externalities involved in producing high-quality goods for foreign markets. South Korea and Taiwan provide a good test of the theory, as they have sharply different market structures. The results of the empirical analysis provide strong support for the hypothesis.
Keywords: Industrial Organization; Product Quality; Export Performance; South Korea; Taiwan
JEL Codes: F10; L15; O14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Concentrated industries (L79) | Higher product quality (L15) |
| Quality of South Korean manufactured exports (L15) | Higher unit values (D46) |
| Taiwanese unit values (C29) | Lower than Korean unit values (P22) |
| Concentrated industries (L79) | Better management of reputational risks (H12) |
| Better management of reputational risks (H12) | Higher product quality (L15) |