Modelling macroeconomics of quality

Abstract

Due to the availability of numerous microeconomic models of quality, organisations widely measure and control cost of quality in their day-to-day activities. Quality of products and services is no more the issue of producers only because the consequences of poor quality are diverse. Quality also concerns nations, regions and the world in general. There are sporadic investments to minimise the supply of poor quality products/services either for local or international consumers. Up to now however, there is limited or no attempt to model the macroeconomics of quality. The aim of this paper is to develop a model on how to measure and control cost of quality at national level. The new model is found to be the aggregation of production, export, import and market related cost items which will then help to understand the consequences of poor quality products/services and will give rationale to the public investment on national quality infrastructure. In addition, the model will help to correctly understand the macroeconomics of a nation which basically does not consider cost of quality of the national production in its measurement. This will also pave a way to future researchers on diagnosing the health of a nation's economy.