A model of product development in which firms steadily upgrade the quality of their products. Movement up the quality ladder includes making products more reliable and improving their specifications and design. In the process a product changes from being a cheap line aiming at the lower end of the market, to being a superior article aimed at more sophisticated and better-off consumers. This process is associated with the development of newly industrialized countries. The quality ladder is a key element in some models of endogenous growth.