Patterns of Catching-Up in Candidate Countries' Manufacturing Industry
AbstractThis paper analyses the structural changes that have taken place in CEE candidate countries' manufacturing industry during the last decade. In the more advanced candidate countries for EU membership, industry has been able to recover at least part of its previous position thanks to active restructuring and privatization efforts, fostered especially by inflows of FDI. Employment declined more than output and over five million manufacturing jobs were lost in the region between 1990 and 1999. Production specialization has markedly increased between 1990 and 1999 in nearly all candidate countries. The top five branches account for 60% to more than 70% of manufacturing industry output. The structure of manufacturing industry in the majority of candidate countries is now fairly close to the European pattern both in terms of production and employment (exceptions are Bulgaria, Romania and the Baltic states). A new pattern of productivity winner and loser branches is emerging winners are electrical, optical and transport equipment as well as furniture; losers are food and beverages, textiles, leather, wood products and chemicals. Hungary is a productivity leader among the candidate countries; Bulgarian and Romanian labour productivity is just one fourth of the Hungarian level. In several countries wages are growing faster than productivity, implying a gradual deterioration of the international labour cost competitiveness (except Hungary and possibly also Poland). The winner branches have managed to increase their comparative cost advantages vis-à-vis the present EU member states. But some loser branches - such as textiles, leather and wood products - face clear cost problems and may well have higher unit labour costs than Western Europe. Manufacturing industry has been an important target of FDI in the candidate countries, but the sectoral distribution of FDI is highly uneven. FDI has a clearly positive impact on output growth, labour productivity and ULC improvements.
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Bibliographic InfoPaper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Research Reports with number 279.
Length: 33 pages including 9 Tables and 16 Figures
Date of creation: Aug 2001
Date of revision:
Publication status: Published as wiiw Research Report
Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F15 - International Economics - - Trade - - - Economic Integration
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
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- Johannes Stephan, 2003.
"Industrial Specialisation and Productivity Catch-Up in CEECs - Patterns and Prospects,"
ERSA conference papers
ersa03p320, European Regional Science Association.
- Johannes Stephan, 2002. "Industrial Specialisation and Productivity Catch-Up in CEECs - Patterns and Prospects -," IWH Discussion Papers 166, Halle Institute for Economic Research.
- Dr Johannes Stephan, 2008.
"Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap,"
- Dr Johannes Stephan, 2004. "Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap," Development and Comp Systems 0403003, EconWPA.
- 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 184, Halle Institute for Economic Research.
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