European Trade and Foreign Direct Investment U-Shaping Industrial Output in Central and Eastern Europe - Theory and Evidence
Abstract
We examine the evolution of industrial output in Bulgaria, Hungary, Poland and Romania over the period 1989-1995 in terms of product trade orientation prior to the transition process, some products traded in a market economy while others traded in the artificial market of the Soviet Bloc. We theoretically and empirically model the growth dynamics of EU oriented output within sectors of industry, ex-post trade and market liberalisation, as Foreign Direct Investment (FDI) induced Schumpeterian (vertical) waves of product innovation. We estimate the growth dynamics of non-EU oriented output within sectors as unobservable deterministic sector and country specific heterogeneity. The results indicate that the evolution of industrial production within sectors that were EU oriented prior to transition grew with increasing convexity over time. This growth was unconstrained by the transition process due to increased access to the European market, foreign capital and foreign expertise. Pre-transition non-EU industrial production is estimated to follow the same pattern as that observed in CIS countries. Hence the faster recovery, or the U-Shape industrial output, observed in CEE as compared with CIS countries is mainly explained by the inherited presence of EU oriented production and its unconstrained growth over the transition period.(This abstract was borrowed from another version of this item.)
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Paper provided by International Monetary Fund in its series IMF Working Papers with number 98/150.Length: 26
Date of creation: 01 Oct 1998
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Handle: RePEc:imf:imfwpa:98/150
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Keywords:Other versions of this item:
- Alexandre Rekine & Patrick Paul Walsh, 1998. "European Trade and Foreign Direct Investment. U-Shaping Industrial Output in Central and Eastern Europe: Theory and Evidence," LICOS Discussion Papers 7398, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Giulia Faggio, 2007. "Job Destruction, Job Creation and Unemployment in Transition Countries: What Can We Learn?," CEP Discussion Papers dp0798, Centre for Economic Performance, LSE.
- Orla Doyle & Patrick Paul Walsh, 2005.
"Did political constraints bind during transition? Evidence from Czech elections 1990 - 2002,"
Trinity Economics Papers
tep200515, Trinity College Dublin, Department of Economics.
- Orla Doyle & Patrick Paul Walsh, 2005. "Did political constraints bind during transition? Evidence from Czech elections 1990 - 2002," Trinity Economics Papers 2000515, Trinity College Dublin, Department of Economics.
- Orla Doyle & Paul Patrick Walsh, 2006. "Did Political Constraints Bind during Transition? Evidence from Czech Elections 1990-2002," The Institute for International Integration Studies Discussion Paper Series iiisdp117, IIIS.
- Doyle, Orla & Walsh, Patrick Paul, 2005. "Did Political Constraints Bind During Transition? Evidence from Czech Elections 1990-2002," IZA Discussion Papers 1719, Institute for the Study of Labor (IZA).
- repec:tcd:wpaper:tep15 is not listed on IDEAS
- McGoldrick, Peter & Walsh, P. Paul, 2007. "Successful Factor Market Competition Pre-Privatisation? China`s eclectic.com," Research Technical Papers 3/RT/07, Central Bank of Ireland.
- Magdalena RĂDULESCU & Luminiţa ŞERBĂNESCU, 2012. "The Impact of FDIs on Exports, and Export Competitiveness in Central and Eastern European Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 2(1), pages 5, February.
- Konings, Joep & Xavier, Ana, 2002.
"Firm growth and survival in a transition country: Micro evidence from Slovenia,"
Open Access publications from Katholieke Universiteit Leuven
urn:hdl:123456789/121576, Katholieke Universiteit Leuven.
- Jozef Konings & Ana Xavier, 2002. "Firm Growth and Survival in a Transition Country: Micro Evidence from Slovenia," LICOS Discussion Papers 11402, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Faggio, Giulia & Konings, Jozef, 1999. "Gross Job Flows and Firm Growth in Transition Countries: Evidence Using Firm Level Data on Five Countries," CEPR Discussion Papers 2261, C.E.P.R. Discussion Papers.
- Faggio, Giulia & Konings, Joep, 1999. "Gross job flows and firm growth in transition countries : evidence using firm level data," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/237912, Katholieke Universiteit Leuven.
- Bezuidenhout, Henri & Naude, Wim, 2008. "Foreign Direct Investment and Trade in the Southern African Development Community," Working Papers RP2008/88, World Institute for Development Economic Research (UNU-WIDER).
- Köke, Jens & Salem, Tanja, 2000. "Corporate finance and restructuring: evidence from Central and Eastern Europe," ZEW Discussion Papers 00-21, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Goran Vuksic, 2005. "Impact of foreign direct investment on Croatian manufacturing exports," Financial Theory and Practice, Institute of Public Finance, vol. 29(2), pages 131-158.
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