“Product Quality in CEE-EU Trade. Determinants and Adjustment Effects”,

This study concerns the role of product differentiation and quality upgrading in the changing commodity composition of Italy-CEE trade. First, this is be done through an assessment of the weight of high and low quality intra-industry trade (IIT) measured by the Grubel-Lloyd index. Then, we look at the features assumed by the process of trade reorientation using a Constant Market Share Analysis. This breaks down the growth in CEE exports to Italy into two shares: a “demand” and a “competitiveness” one. The former may be used to check what proportion of exports has been rising because of a shift to productions of growing demand. The latter, indicates how much the CEECs have been able to expand their shares in the same markets due to an increase in their competitiveness. Then, it is verified by regression analysis whether the increased competitiveness has been determined by increased price competitiveness (term of trade effect) or by quality upgrading. Finally, we give some hints on the likely effects of different sources of trade with the CEECs for different categories of workers.