Recent analysis of detailed product-level trade data points to substantial heterogeneity in variety and quality patterns in international trade. We study the evidence of variety and quality of manufacturing trade among European Union countries. The existing methodology is extended by distinguishing between various industrial sectors. In particular we focus on the role of technological innovation and technological spillovers. Although the impact of technological innovation depends on the

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... on measure used, there appears to be a quality-upgrading effect originating from innovation. Moreover, technological spillovers increase both the variety and quality of intra-European trade.