Trade with Central and Eastern Europe: The Case of Greece

This paper provides an analysis of the impact of economic reforms in the Central and East European countries (CEECs) on Greece in terms of trade flows and investment activity. We make a number of key observations. First, there is a dichotomy between Greece and the rest of the European Union (EU11) in their trade relations with the CEECs, in the sense that for Greece the most important trading partners are the Balkan countries whereas for the EU11 they are the 'Visegrad' countries. Second, the impressive growth in Greece-CEEC trade is mainly due to Greek exports, with CEEC growth rates of exports to Greece being mediocre. Third, intra-industry trade between Greece and the CEECs is higher than that between Greece and the EU11. Finally, Greek foreign direct investment (FDI) in the CEECs has been almost entirely concentrated in Greece's Balkan neighbours, and it is both substantial and dynamic. We conclude that for the near future prospects of trade between Greece and the CEECs are very optimistic and that the pressures exercised by CEEC products on Greece's exports in the Union's market will be rather mild. Furthermore a new, dynamic regional market is emerging in the Balkans in which Greece is called to play a central role.