Quality rise in Dutch exports in 1988-1996?
CPB-indicator: Kwaliteit Nederlandse export verbetert 2% per jaar
First, quality improvement determines success in international competition. Second, upgrading stimulates economic growth due to more variety. Third, growth due to better qualities hardly hurts the environment. However, little is known about the actual changes in production quality, at least for the Netherlands. Thus, any attempt to quantify quality changes would be welcome.
This paper uses the price per kilogram of a product as the proxy for its quality. We focus on changes in the composition of products at industry level over 1988-1996. We find that the quality of Dutch exports rose at 2.2% per year. We also find that only a few products account for the bulk of the quality change. The findings at the industry level are in line with those for total exports, with some exceptions.
Finally, four Dutch industries are analysed over 1992-1995 in an international context. Two of them showed a quality decline according to our proxy measure. In agriculture and food processing, the proxied quality of Dutch exports dropped, while that of Denmark (the main competitor of the Netherlands) rose. Also the proxied quality of the Dutch exports of mechanical machines fell. In this case the Dutch performance follows the trend of downgrading in France and Sweden. In contrast, the Dutch export quality of chemicals and steel rose. Here, the Netherlands outperformed the other investigated countries.