This section adresses this issue by measuring the relative quality of OPT flows
carried out by the footwear districts selected for this study. In sectors characterised by
high intra-industry trade (IIT), i.e. by trade of similar but differentiated items, it is
interesting to explore the relative quality of exports with respect to imports, in order to
see if a country is exporting higher or lower quality items than the ones it is importing.
We perform this exercise on OPT trade in the Italian footwear sector.7 A traditional
index used to measure the relative quality of exports and imports is the Quality Index
(QI) computed as the share between unit value of exports and unit value of imports
(Fontagné and Freudenberg, 1997). Quality differences are bigger as much as QI is far
from 1. Flows are usually classified as vertically differentiated (i.e. with relevant
differences in quality) if QI is significantly different from 1, i.e. is external of an
exogenous interval, the most commonly used being (0.85-1.15). If QI is greater than
1.15 trade if VIIT+ (i.e. the quality of exports is relatively higher than the quality of
imports), whereas if QI is smaller than 0.85 trade is VIIT- (i.e. the quality of imports is
relatively higher than the quality of exports).
Not surprisignly, the evidence shows that for all the districts considered the unit
value of imported parts is higher than the unit value of exported parts (and it is likely
that imported items had originally been exported from domestic producters at a lower
level of processing and therefore with a lower unit value) (Table 4, column 1). What
makes the differences among different districts is the percentage of unit value added
abroad with respect to the one produced domestically. The spread is much higher for
districts in Veneto and Lecce, whereas it is hardly significant for Barletta and Fermano-
Maceratese, i.e. the percentage of unit value added abroad (on intermediate production)
is much higher for Verona (368%), Lecce and Treviso (228%) than for Barletta (36%)
and Fermano-Maceratese (45%). As regards finished goods (Table 4, column 2), the
opposite occurs: the unit value of imported finished goods (which unfortunately is
available only for districts in Veneto) is lower than the unit value of exported goods (in
this case, the difference is much higher for Brenta). This suggests - again, not
surprisigly - that the finished goods produced domestically and exported for further
processing have a higher quality than the finished items imported by the country.
We investigate further on the relative quality of OPT flows by comparing the QI on
intermediate and final goods (Table 4, columns 3 and 4). As QI for intermediate goods
7 This is possible only since 2001, when OPT data on both imports and exports were firstly collected.