Report

The dynamics and differentiation of Latin American metal exports

Abstract: This paper investigates the propensity of exporters in certain primary commodity sectors to innovate and then attempts to measure the associated gains. The high degree of differentiation in metal products is giving rise to the potential for vertical upgrading for a substantial portion of Latin American export sales. Estimation of a demand system for U.S. imports shows that relatively high-priced new varieties tend to gain market share, which suggests a correspondingly large increase in the relative quality of those varieties. Breaking down the types of metal products by order of their value-added in production reveals a pattern of specialization away from low-value ores and toward high-value intermediate and finished products. Upgrading varieties and shifting specialization to downstream outputs account for the vast majority of Latin America?s increasing market share in metals over the past thirty years.

Keywords: Exports; Mineral industries; Primary commodities;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2011

Number: 508