Quality mode of Lithuanian Manufacturing Industry’s Exports

Abstract

The analysis of exports structure by the quality mode lays the foundations to judge about the actual performance of the manufacturing industry and foresee the main trends of exports development in the global market. Moving towards the competition on quality, the knowledge and technology are increasingly becoming the drivers for competitiveness and sustainable growth while the competition on lower costs is facing difficulties due to the rising costs of labour and other resources. The research study examines the structure of Lithuanian origin exports by the quality elasticity, factor inputs and labour skills modes, which characterise the quality peculiarities of exports. The competitiveness of Lithuanian exports is based on employing lower costs rather than on creating quality advantages. Thus, the analysis of the structure of Lithuanian origin exports by commodities sensitivity to price versus sensitivity to quality is a significant research problem facing the tendencies of rising resource and labour costs and losing lower costs advantages. Policy makers monitoring the industrial structure have to focus on the structural upgrading within sectors on the basis of exports quality. The core aim of the research study is to reveal the exports structure by Revealed Quality Elasticity (RQE), Factor inputs and Labour skills of Lithuanian manufacturing industries. The study is intended to analyse the main changes in exports structure aiming to answer the question what shifts have occurred in the long run and how the exports have been affected by economic integration and globalization processes. The relevance of the empirical study is denoted by the lack of the detailed research on the quality of Lithuanian exports as well as the changes in exports quality by different modes. The main scientific problem raised in this empirical study is the disclosure of what shifts have occurred in the exports quality during the period of 2003–2012 and how these shifts will affect the future exports development. From an individual country’s perspective, it is important to identify the internal and external factors which affect the upgrading quality of exports. This empirical study employs the RQE, Factor inputs and Labour skills taxonomies to classify the Lithuanian exports by different dimensions, and illustrates the solutions of the raised research problem. Altogether, the taxonomies make a profile of Lithuanian origin exports structure regarding the quality dimension and serve as a measure to forecast the long-term trend of export development. The results of the empirical study have revealed that Lithuanian origin exports share taken by high RQE industries declined during the period of 2003–2012, and was twice as low as the average of EU-27, where High RQE accounts for nearly a half of the total exports. The largest exports share was made by Medium RQE industries, and this confirms the fact that a certain share of Lithuanian exports remains price-sensitive and competes on the basis of lower costs. The analysis of Lithuanian exports by Factor inputs taxonomy revealed the low share of technology driven and marketing driven industries. Nevertheless, by improving the quality of exports, Lithuanian producers can expand their trade markets in high-income countries, which tend to import more high quality commodities, establish long term relations with purchasers and attract knowledge-intensive foreign direct investment. DOI: http://dx.doi.org/10.5755/j01.ee.25.4.6925