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Industrial Policy and Restructuring in Eastern Europe


  • Hughes, Gordon
  • Hare, Paul G


Using input-output and world price data, this study computes domestic resource costs (DRCs) for branches of manufacturing industry in Bulgaria, Czechoslovakia, Hungary, Poland and the former Soviet Union. The results show a wide dispersion of DRCs in each country, including branches with negative value added at world market prices. Restructuring each economy towards the more competitive branches raises value added at world prices and usually raises employment as well. Since the countries studied are competitive in different sectors, there is little need for them to coordinate industrial policies, but there would be great benefit from schemes to facilitate intraregional trade (e.g. some form of union). The region's present trade with the EC accounts for a small fraction of most EC markets and hence Eastern Europe should not be seen as a threat by EC producers: there is scope for faster liberalization of access to EC markets.
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Suggested Citation

  • Hughes, Gordon & Hare, Paul G, 1992. "Industrial Policy and Restructuring in Eastern Europe," Oxford Review of Economic Policy, Oxford University Press, vol. 8(1), pages 82-104, Spring.
  • Handle: RePEc:oup:oxford:v:8:y:1992:i:1:p:82-104

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    References listed on IDEAS

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    6. Stephan Fahr & Roberto Motto & Massimo Rostagno & Frank Smets & Oreste Tristani, 2013. "A monetary policy strategy in good and bad times: lessons from the recent past," Economic Policy, CEPR;CES;MSH, vol. 28(74), pages 243-288, April.
    7. Bonci, Riccardo, 2011. "Monetary policy and the flow of funds in the euro area," Working Paper Series 1402, European Central Bank.
    8. Bindseil, Ulrich & Winkler, Adalbert, 2012. "Dual liquidity crises under alternative monetary frameworks: a financial accounts perspective," Working Paper Series 1478, European Central Bank.
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    Cited by:

    1. Martínez Ruiz, Elena, 2003. "Autarkic policy and efficiency in the Spanish industrial sector. An estimate of domestic resource cost in 1958," Economic History Working Papers 22352, London School of Economics and Political Science, Department of Economic History.
    2. Falk, Martin & Raiser, Martin & Brauer, Holger, 1996. "Making sense of the J-curve: Capital utilisation, output, and total factor productivity in Polish industry 1990-1993," Kiel Working Papers 723, Kiel Institute for the World Economy (IfW).
    3. Jackman, Richard & Pauna, C, 1997. "Labour market policy and the reallocation of labour across sectors," LSE Research Online Documents on Economics 2047, London School of Economics and Political Science, LSE Library.
    4. Havas, Attila, 1993. "CMEA and COCOM Abolished: Restructuring Precision Engineering Industry in Hungary," MPRA Paper 52745, University Library of Munich, Germany.
    5. Bojnec, Stefan, 2002. "Agricultural and Food Competitiveness in Transition Central and Eastern European Countries: Social Profit Rate and Domestic Resource Cost Approaches," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 3(2), August.
    6. Raiser, Martin, 1995. "Industrial reforms in China: State-owned enterprises between output growth and profitability decline," Kiel Working Papers 672, Kiel Institute for the World Economy (IfW).
    7. Martin Raiser, 1993. "Old habits die hard," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 28(4), pages 170-177, July.
    8. Zorya, Sergiy & von Cramon-Taubadel, Stephan, 2002. "When Will Ukraine be a Global Player on World Agricultural Markets?," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24912, European Association of Agricultural Economists.
    9. Martin Raiser, 1995. ""Transition is a bridge, therefore do not dwell upon it" 1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(2), pages 215-246, June.
    10. Paul Hare, 2001. "Trade Policy During the Transition: Lessons from the 1990s," The World Economy, Wiley Blackwell, vol. 24(4), pages 482-512, April.
    11. Nunnenkamp, Peter, 1995. "Wirtschaftsreformen in Entwicklungs- und Transformationsländern: Anreizprobleme, Glaubwürdigkeitsdefizite und die Erfolgschancen umfassender Reformen," Open Access Publications from Kiel Institute for the World Economy 1636, Kiel Institute for the World Economy (IfW).
    12. Raiser, Martin & Nunnenkamp, Peter, 1993. "Output decline and recovery in Central Europe: the role of incentives before, during and after privatisation," Kiel Working Papers 601, Kiel Institute for the World Economy (IfW).
    13. Holger Schmieding, 1993. "From plan to market: On the nature of the transformation crisis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 129(2), pages 216-253, June.
    14. Jeffrey B. Miller, 1995. "Industrial planning and the transition to a market economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(3), pages 289-299, September.
    15. Gács, János & Peck, Merton & Illarionov, Andrei & Havlik, Peter & Kuboniva, Masaaki & Panitch, Vladimir & Sutela, Pekka & Lányi, Kamilla & Bulantsev, Vsevolod & Goldberg, Linda & Tenorio, Rafael & De , 1995. "International Trade Issues of the Russian Federation," MPRA Paper 60426, University Library of Munich, Germany.
    16. Dani Rodrik, 1993. "Trade and Industrial Policy Reform in Developing Countries: A Review of Recent Theory and Evidence," NBER Working Papers 4417, National Bureau of Economic Research, Inc.
    17. Perkins, Frances C., 1994. "State enterprise reform and macro-economic stability in transition economies," Kiel Working Papers 665, Kiel Institute for the World Economy (IfW).
    18. Raiser, Martin, 1993. "Governing the transition to a market economy," Kiel Working Papers 592, Kiel Institute for the World Economy (IfW).
    19. Richard Jackman & C Pauna, 1997. "Labour Market Policy and the Reallocation of Labour Across Sectors," CEP Discussion Papers dp0338, Centre for Economic Performance, LSE.
    20. Raiser, Martin, 1992. "Soft budget constraints: An institutional interpretation of stylised facts in economic transformation in Central Eastern Europe," Kiel Working Papers 549, Kiel Institute for the World Economy (IfW).

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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