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Competitiveness of CEE Industries: Evidence From Foreign Trade Specialization and Quality Indicators


Author Info

  • Peter Havlik

    (The Vienna Institute for International Economic Studies, wiiw)

  • Michael Landesmann

    (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer

    (The Vienna Institute for International Economic Studies, wiiw)


This paper analyses the competitiveness of the manufacturing industry in the CEE candidate countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) with special emphasis on trade with the European Union during the second half of the 1990s. Changing specialization patterns, the evolution of sectoral trade balances and market shares, as well as price/quality gaps at detailed product level, are used as indicators of trade competitiveness. The CEE candidate countries' market share in extra-EU manufacturing imports grew from 9.5% in 1995 to 11.4% in 1999, the EU export surplus in manufacturing trade is diminishing. Candidate countries' exports to the EU have been increasingly specialized on a few key industries textiles and textile products, basic metals and fabricated metal products, electrical & optical equipment and transport equipment; in the Baltic states also on wood and wood products. The manufacturing industry in Slovakia features the highest number of branches with a trade surplus while the weakest competitive position in trade with the EU has been identified for the manufacturing industry in Slovenia, Poland and Latvia. Textiles, wood products, basic metals and furniture were identified as branches where candidate countries enjoy revealed comparative advantages (RCAs) in trade with the EU. Apart from chemicals, rubber and plastic products, nearly all candidate countries show negative RCAs also in pulp and paper, machinery and equipment n.e.c. and electrical and optical equipment. Technology-driven industries account for a growing share of exports in nearly all candidate countries, labour-intensive industries have growing export shares in Bulgaria, Romania and the Baltic states. The representation of labour-intensive industries in candidate countries' exports to the EU is still - with the notable exception of Hungary - much bigger than in the present EU member states; the representation of technology-driven industries in candidate countries' exports to the EU is usually smaller (Hungary, the Czech Republic, Estonia and Slovakia are exceptions). Nevertheless, the initial export specialization pattern of CEE candidate countries has nearly completely reversed in many candidate countries export specialization is evolving towards more sophisticated and less capital-intensive industries. Labour-intensive industries accounted for a major part of competitive export gains in Bulgaria, Latvia, Lithuania and Romania. Finally, using very detailed information on export unit prices, an analysis of the 'quality' of candidate countries' export products shows that there were substantial price gaps between CEE producers and EU incumbents over the 1990s. However, some countries have closed these gaps (Hungary and Slovenia in particular), while others maintain very substantial price gaps (Bulgaria and Romania in particular). The largest price/quality gaps are found in 'technology-driven' and 'mainstream' industries, as well as in 'high-skill-intensive branches'; the lowest price gaps in capital-intensive and low-skill-intensive branches. Over time, however, the strongest 'quality catching-up' can be observed in 'technology-driven' and 'high-skill-intensive' industries. Again, Hungary occupies the position of an 'outlier' amongst the candidate countries, especially with regard to 'quality catching-up' in the 'technology-driven' and skill-intensive industries.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Research Reports with number 278.

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Length: 58 pages including 20 Tables and 24 Figures
Date of creation: Jul 2001
Date of revision:
Publication status: Published as wiiw Research Report
Handle: RePEc:wii:rpaper:rr:278

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Keywords: EU candidate countries; competitiveness; trade specialization; catching-up; structural and technological change;

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Cited by:
  1. Johannes Stephan, 2003. "EU Accession Countries’ Specialisation Patterns in Foreign Trade and Domestic Production - What can we infer for catch-up prospects?," IWH Discussion Papers, Halle Institute for Economic Research 184, Halle Institute for Economic Research.
  2. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
  3. János Gács, 2003. "Transition, EU Accession and Structural Convergence," Empirica, Springer, Springer, vol. 30(3), pages 271-303, September.
  4. Michael A. Landesmann, 2003. "Structural features of economic integration in an enlarged Europe: patterns of catching-up and industrial specialisation," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 181, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  5. Facchini, Giovanni & Segnana, Maria Luigia, 2003. "Growth at the EU periphery: the next enlargement," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 43(5), pages 827-862.
  6. Jože P. Damijan & Matija Rojec & Maja Ferjančič, 2011. "The Growing Export Performance of Transition Economies: EU Market Access versus Supply Capacity Factors," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(4), pages 489-509, December.
  7. Joze P. Damijan & Matija Rojec & Maja Ferjancic, 2008. "Growing export performance of transition economies: EU market access versus supply capacity factors," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 20208, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  8. Balazs Egert & Amina Lahrèche-Revil, 2003. "Estimating the Fundamental Equilibrium Exchange Rate of Central and Eastern European Countries; The EMU Enlargement Perspective," Working Papers, CEPII research center 2003-05, CEPII research center.
  9. repec:wii:bpaper:bowp:014 is not listed on IDEAS
  10. Vasily Astrov, 2001. "Structure of Trade in Manufactured Products Between Southeast European Countries and the European Union," wiiw Balkan Observatory Working Papers, The Vienna Institute for International Economic Studies, wiiw 14, The Vienna Institute for International Economic Studies, wiiw.
  11. Matija Rojec & Janez Sustersic & Bostjan Vasle & Marijana Bednas & Slavica Jurancic, 2004. "The rise and decline of gradualism in Slovenia," Post-Communist Economies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 16(4), pages 459-482.


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