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Evolution of trade patterns in the new EU member states

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  • Andrea Zaghini

    (Banca d'Italia)

Abstract

The paper analyses the most recent evolution of the trade specialisation pattern in the 10 new EU Member States. Relying on the empirical approach of the Markov transition matrices it analyses both the changes in the external shape of the distribution of comparative advantages and the intra-distribution dynamics. The new Members show an indeed dynamic trade pattern; they were able to gain comparative advantages relatively fast in sectors in which they were lagging behind at the beginning of the transition process, notably in some �high tech� products. In addition, many specialisation improvements occurred in those items for which the world demand expands at the fastest rate, hinting to the possibility of an increase in their trade shares on world markets. Both findings can be explained by the initial need to rebuild and modernise the entire capital stock, the significant skilled-labour force endowment, and the large FDI inflows that allowed them to skip intermediate states of technological development.

Suggested Citation

  • Andrea Zaghini, 2005. "Evolution of trade patterns in the new EU member states," Temi di discussione (Economic working papers) 568, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_568_05
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    More about this item

    Keywords

    Revealed comparative advantages; international specialization model; distribution dynamics;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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