Recent contributions to the growth literature have argued that the structure of an economy, as measured by its productive capabilities, is a key determinant for inter-country differences in development. Productive capabilities have been shown to be highly predictive of future economic growth,...

This paper investigates whether increased import competition leads firms to engage in incremental innovation reflected in product quality upgrading. The econometric analysis relies on a rich dataset of Chilean manufacturing firms and their products. Product quality is measured with unit values...