Price Competitiveness in Central and Eastern Europe - a case study for transition economies
AbstractNewly industrialized countries and transition economies are often perceived as a threat to Western countries in public discussion, and concerns about economic 'competitiveness' arise. The present paper focuses on the specific macro-economic term 'price competitiveness'. It analyzes the underlying assumptions of the term, explains how the 'price competitiveness' indicator is composed, and what the restrictions are when applying it to transition economies. When calculating the 'price competitiveness' indicator for Central and Eastern European New Member States of the European Union in the last decade, all ten countries show values that are conventionally understood as a steady 'loss in price competitiveness'. Still, this has not led to lower export growth in the last decade in these countries. Instead, all ten assessed countries show above-average growth in Exports, in Manufacturing goods, and in Gross Domestic Product, compared to the rest of the world. The 'price competitiveness' indicator fails, due to inherent assumptions and technical implications, to explain the Export development in economies that are fastgrowing and going through a process of industrialization - so called 'catch-up economie' - what has been the case in the Central and Eastern European countries in the last decade. The 'price competitiveness' indicator should thus not be applied irrespectively of a country's economic situation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Studies with number 01-2010.
Length: 70 pages
Date of creation: 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-CSE-2010-05-02 (Economics of Strategic Management)
- NEP-EUR-2010-05-02 (Microeconomic European Issues)
- NEP-TRA-2010-05-02 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Margit Molnár & Nigel Pain & Daria Taglioni, 2007. "The Internationalisation of Production, International Outsourcing and Employment in the OECD," OECD Economics Department Working Papers 561, OECD Publishing.
- Ian W. Marsh & Stephen Tokarick, 1994. "Competitiveness Indicators - A Theoretical and Empirical Assessment," IMF Working Papers 94/29, International Monetary Fund.
- Krugman, Paul R, 1996. "Making Sense of the Competitiveness Debate," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 17-25, Autumn.
- Robert C. Feenstra, 1998.
"Integration of Trade and Disintegration of Production in the Global Economy,"
Journal of Economic Perspectives,
American Economic Association, vol. 12(4), pages 31-50, Fall.
- Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
- Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics.
- Edmund R Thompson, 2003. "A grounded approach to identifying national competitive advantage: a preliminary exploration," Environment and Planning A, Pion Ltd, London, vol. 35(4), pages 631-657, April.
- Martin Cincibuch & Jiri Podpiera, 2004.
"Beyond Balassa - Samuelson: Real Appreciation in Tradables in Transition Countries,"
2004/09, Czech National Bank, Research Department.
- Martin Cincibuch & Jiří Podpiera, 2006. "Beyond Balassa-Samuelson: Real appreciation in tradables in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(3), pages 547-573, 07.
- Gandolfo, Giancarlo & Goldberg, Michael D., 2005. "International Finance And Open-Economy Macroeconomics," Macroeconomic Dynamics, Cambridge University Press, vol. 9(02), pages 263-266, April.
- Gerald Epstein & James Burke, 2001. "Threat Effects and the Internationalization of Production," Working Papers wp15, Political Economy Research Institute, University of Massachusetts at Amherst.
- Irving B. Kravis & Robert E. Lipsey, 1971. "Price Competitiveness in World Trade," NBER Books, National Bureau of Economic Research, Inc, number krav71-1.
- Goldstein, Morris & Officer, Lawrence H, 1979. "New Measures of Prices and Productivity for Tradable and Nontradable Goods," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 413-27, December.
- Kravis, Irving B & Lipsey, Robert E, 1992. "Sources of Competitiveness of the United States and of Its Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 193-201, May.
- Mick Silver, 2007. "Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?," IMF Working Papers 07/121, International Monetary Fund.
- Martine Durand, 1986. "Method of Calculating Effective Exchange Rates and Indicators of Competitiveness," OECD Economics Department Working Papers 29, OECD Publishing.
- �Zlem Onaran & Engelbert Stockhammer, 2005. "Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and South Korea," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 41(1), pages 65-89, January.
- Ian Marsh & Stephen Tokarick, 1996. "An assessment of three measures of competitiveness," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(4), pages 700-722, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Nemitz).
If references are entirely missing, you can add them using this form.