© The European Bank for Reconstruction and Development, 2005. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. Economics of Transition Volume 13 (1) 2005, 51– 76 Blackwell Publishing, Ltd. Oxford, UK HICO History Compass 1478-0542 © Blackwell Publishing 2004 XXX Original Article Dimensions of QualityUpgrading Dulleck, Foster, Stehrer andWoerz Dimensions of quality upgrading Evidence from CEECs Uwe Dulleck*, Neil Foster*, Robert Stehrer** and Julia Woerz** * Department of Economics, University of Vienna, Hohenstaufengasse 9, A-1010 Vienna, Austria. **The Vienna Institute for International Economic Studies (WIIW), Oppolzergasse 6, A-1010 Vienna, Austria. E-mail: stehrerwiiw.ac.at Abstract The impact of the Central and Eastern European (CEE) economies’ trade integration with European markets on CEE trade structures has been studied extensively. These studies frequently observe a quality upgrading of CEE exports. In this paper we consider three dimensions of quality upgrading: upgrading across industries, upgrading across different quality segments within industries and, finally, product upgrading within quality segments inside industries. For the analysis we partition industries into quality segments based on EU-15 import unit values. The results for ten CEE countries (comprising the CEE-5, the Baltics and South East Europe) and thirteen industries suggest fundamental differences, both across country groups and across the three different notions of quality upgrading. The CEE-5 show no evidence of entering a ‘low-quality trap’ in all three dimensions. By contrast, while there is a general catching-up process across industries and inside quality segments, the second notion of low-quality specialization may be applicable within the high-tech industries to the performance for the Baltics and South East Europe as a group. JEL classifications: F14, F15, L60, P52. Keywords: Trade composition, quality, CEECs, integration. * We are grateful for comments by Jesús Crespo-Cuaresma (University of Vienna), Michael Landesmann (WIIW and Johannes Kepler University, Linz) and an anonymous referee.