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Structural Change, Innovation and Growth in the Context of EU Eastern Enlargement


  • Dora Borbély

    () (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))

  • Paul J.J. Welfens

    () (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))


EU Eastern enlargement has brought trade creation, growth and shifts in trading patterns in the context of opening up, structural change, foreign direct investment and rising domestic investment. We focus on outsourcing and changes in relative prices, RCAs, and export unit values in new EU member states. From a theoretical perspective, it is argued that real exchange rate changes, shifts of RCAs, as well as product innovations/product upgrading will influence the pattern of foreign direct investment. Thus a hybrid Heckscher-Ohlin-Dunning-Schumpeter perspective is an adequate approach. From an empirical point of view, the results of a dynamic panel estimation reveals that industrial production, export unit values, FDI and wages are the most important factors driving comparative advantages in trade. However, their impact and significance depends to a great extent on whether we deal with labour intensive industries, high technology industries or total manufacturing.

Suggested Citation

  • Dora Borbély & Paul J.J. Welfens, 2006. "Structural Change, Innovation and Growth in the Context of EU Eastern Enlargement," EIIW Discussion paper disbei140, Universitätsbibliothek Wuppertal, University Library.
  • Handle: RePEc:bwu:eiiwdp:disbei140

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    References listed on IDEAS

    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
    3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    4. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    More about this item


    Trade; Foreign Direct Investment; EU; Eastern Enlargement; Structural; Change; Panel Data Analysis;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models


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