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Economic Impact and Effect of Quality and Standards

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Economic Impact and Effect of Quality and Standards This excellent book clearly lays out why improving quality and standards is critical . Edge a Competitive for and Standards Quality Systems It is particularly relevant to firms and policy makers in all developing countries and in 40516 particular for Latin American ones ...[Its] virtue is that it not only explains why quality and standards have to be improved, but most importantly, it shows what policy makers and firms have to do, and how to do it. This is a must-read book. Carl J. Dahlman Henry R. Luce Professor of International Relations and Information Technology Georgetown University Public Disclosure Authorized This very important and must-read book sets out a clear conceptual approach to quality and standards, taking full account of the cons as well as the pros. And it is extremely rich in its examples and insights from the real world. This is policy-oriented microeconomics at its best. Sir Nicholas Stern Head, Government Economic Service, United Kingdom This book provides a comprehensive tool for policy makers confronted with the DIRECTIONS IN DEVELOPMENT challenges of building trade competitiveness in the new global economy.The authors Public Disclosure Authorized are some of the World Bank’s leading experts on private sector development in Latin Trade America, and their insights on what works, what doesn't work, and why are indispensable for practitioners in the field. Danny Leipziger Vice-President, Poverty Reduction and Economic Management Network Quality Systems World Bank and Standards for a Competitive Edge Public Disclosure Authorized Sánchez & Diop Guasch, Racine, J. Luis Guasch, Jean-Louis Racine, Isabel Sánchez, and Makhtar Diop ISBN 0-8213-6894-X Public Disclosure Authorized Quality Systems and Standards for a Competitive Edge Quality Systems and Standards for a Competitive Edge J. Luis Guasch Jean-Louis Racine Isabel Sánchez Makhtar Diop THE WORLD BANK Washington, DC © 2007 The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail [email protected] All rights reserved. 1 2 3 4 :: 10 09 08 07 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The fi ndings, interpretations, and conclusions expressed in this volume do not necessarily refl ect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights @worldbank.org. ISBN-10: 0-8213-6894-X ISBN-13: 978-0-8213-6894-7 eISBN-10: 0-8213-6895-8 DOI: 10.1596/978-0-8213-6894-7 eISBN-13: 978-0-8213-6895-4 Library of Congress Cataloging-in-Publication Data Quality systems and standards for a competitive edge / José Luis Guasch . [et al.]. p. cm. — (Directions in development) Includes bibliographical references and index. ISBN-13: 978-0-8213-6894-7 ISBN-10: 0-8213-6894-X ISBN-10: 0-8213-6895-8 (electronic) 1. Quality control. 2. Quality control—Standards. 3. Competition, International. 4. Poverty. I. Guasch, José Luis. TS156.Q366 2007 658.5'62—dc22 2006100909 Contents Foreword xvii Preface and Acknowledgments xix About the Authors xxi Abbreviations xxiii Chapter 1 Introduction 1 Globalization, Quality, and Standards 2 Defi ning Standards and Quality 9 The National Quality System: An Overview 9 Organization of the Book 11 Chapter 2 Economic Impact and Effect of Quality and Standards 15 Functions of Standards 15 Positive Economic Effects of Standards 17 Negative Economic Effects of Standards 24 The Impact of Standards on Economic Growth: Empirical Evidence 28 The Impact of Standards on International Trade: Empirical Evidence 32 Standards and Quality as an Entry Point for SMEs: The Path to Industrial Upgrading 41 v vi Contents Chapter 3 The Jurisdiction Issue: Roles of the Private and Public Sectors 51 Coordination Mechanisms for Technology Adoption 52 Government Involvement in Standardization 54 National Standards Bodies 56 Chapter 4 Evaluating Compliance with Standards: The Conformity Assessment Framework 63 Certifi cation 65 Testing, Calibration, and Inspection 68 Accreditation 69 Metrology 74 Chapter 5 Opening Doors: Standards, Conformity Assessment, and International Integration 81 The WTO Agreement on Technical Barriers to Trade 83 International Coordination in Standardization 84 The Need for International Recognition of National Accreditation Systems 92 The Need for International Recognition of National Metrology Institutes 95 Chapter 6 The ISO 9000 Quality Management Standards 97 The Function of ISO 9000 97 ISO 9000 and Competitive Advantage 99 Internal Firm-Level Barriers to ISO 9000 Certifi cation 105 National Factors Infl uencing the Diffusion of ISO 9000 114 Chapter 7 Standardization in Latin America 127 The Standards-Setting Institutions 128 The Performance of Standards Bodies 136 International Integration 139 Chapter 8 Certifi cation in Latin America 149 Certifi cation Activities 149 Contents vii The Supply of Certifi cation Services 159 Possible Factors Infl uencing ISO 9000 Diffusion 162 Chapter 9 Accreditation in Latin America 171 Accreditation Institutions 171 Accreditation Activities 177 International Integration 180 Chapter 10 Metrology in Latin America 185 The National Metrology Institutions 185 Metrological Activities 189 International Cooperation and Recognition of Metrology Institutions 190 Chapter 11 Existing Policies and Support Programs 193 Brazil: Center for Quality, Safety and Productivity 193 Colombia: Quality and Environmental Management Program 194 Peru: CERTIpyme, PYMEvaluación, and PRECISO 196 Mexico: National Committee on Productivity and Technological Innovation 197 Chile: Chilean Economic Development Agency 198 Argentina: Standards and Quality Accreditation Program 199 Chapter 12 Policy Recommendations and Conclusion 201 General Principles for Implementation and Reform of National Quality Systems 201 Consolidating the National Quality System 203 Accreditation 204 Metrology 207 Standardization 209 Supporting the Demand for Certifi cation, Testing, and Calibration 212 Conclusion 216 viii Contents Appendix A An Evaluation of Mexico’s National Quality System 219 Standardization 220 Metrology and Calibration 221 Accreditation 224 Certifi cation, Testing, and Inspection 227 Appendix B An Evaluation of Turkey’s National Quality System 233 Certifi cation, Testing, and Inspection 236 Accreditation 243 Metrology and Calibration 249 Standardization 252 Conclusion 258 Notes 261 References 269 Index 281 Boxes 1.1 Surviving Crises in Low-Quality Markets: Brazilian Footwear and Chilean Wines 5 1.2 Leather PDA Covers in Bolivia: Using Quality to Enter New Export Markets 7 1.3 The Components of a National Quality System 12 2.1 Quality Standards in the Ugandan Coffee Industry 20 2.2 Transatlantic Competition for First- and Second-Generation Mobile Phones 22 2.3 The Economic Value and Impact of Measurement Standards 26 2.4 Differing Standards and Trade Costs: The Case of Pallets 34 2.5 Food Safety Standards in the European Union 35 2.6 Standards and Quality as an Entry Point to Upgrading in a Horticultural Value Chain 44 2.7 Grapes in India: Changing Market Requirements for Standards and Quality 46 4.1 The Consorcio del Jamón Serrano Español’s Quality Control 67 4.2 Regional Cooperation on Accreditation: The Southern African Example 72 Contents ix 4.3 Evolving Needs of Metrology in Health Care 77 5.1 The Struggle to Create a Single Global Standard for 3G Telephony 84 5.2 South Africa’s Contribution to International Timber Standards 88 6.1 China and the Drive for Quality 106 6.2 Quality Adoption in the Indian Software Sector: Moving Up the Value Chain 121 B1 Conformity Assessment and Access to the EU Market 254 Figures 1.1 Ratio of World Exports to Global GDP 3 1.2 Share of Manufactures in Global Exports of Goods and Services 3 1.3 Price of Developing-Country Manufactured Exports Relative to Price of Developed-Country Exports of Machinery, Transport Equipment, and Services, 1975–95 4 1.4 Schematic Representation of a National Quality System 11 2.1 Contributions of Different Factors to Output Growth in the United Kingdom, 1948–2002 30 2.2 Long-Run Growth of Labor Productivity in the United Kingdom, 1948–2002 30 2.3 Average Productivity Gains Due to Adoption of Quality Standards 32 2.4 Effects of British Standards on UK Exports, Imports, and Trade Balance, 1985–91 38 3.1 The Centralized
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