IDEAS home Printed from
   My bibliography  Save this paper

Price Competitiveness in Central and Eastern Europe - a case study for transition economies


  • Dominique Peters

    () (Macroeconomic Policy Institute (IMK) in the Hans Boeckler Foundation)


Newly industrialized countries and transition economies are often perceived as a threat to Western countries in public discussion, and concerns about economic 'competitiveness' arise. The present paper focuses on the specific macro-economic term 'price competitiveness'. It analyzes the underlying assumptions of the term, explains how the 'price competitiveness' indicator is composed, and what the restrictions are when applying it to transition economies. When calculating the 'price competitiveness' indicator for Central and Eastern European New Member States of the European Union in the last decade, all ten countries show values that are conventionally understood as a steady 'loss in price competitiveness'. Still, this has not led to lower export growth in the last decade in these countries. Instead, all ten assessed countries show above-average growth in Exports, in Manufacturing goods, and in Gross Domestic Product, compared to the rest of the world. The 'price competitiveness' indicator fails, due to inherent assumptions and technical implications, to explain the Export development in economies that are fastgrowing and going through a process of industrialization - so called 'catch-up economie' - what has been the case in the Central and Eastern European countries in the last decade. The 'price competitiveness' indicator should thus not be applied irrespectively of a country's economic situation.

Suggested Citation

  • Dominique Peters, 2010. "Price Competitiveness in Central and Eastern Europe - a case study for transition economies," IMK Studies 01-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  • Handle: RePEc:imk:studie:01-2010

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Özlem Onaran & Engelbert Stockhammer, 2005. "Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and South Korea," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 41(1), pages 65-89, January.
    2. Margit Molnar & Nigel Pain & Daria Taglioni, 2007. "The Internationalisation of Production, International Outsourcing and Employment in the OECD," OECD Economics Department Working Papers 561, OECD Publishing.
    3. Irving B. Kravis & Robert E. Lipsey, 1971. "Price Competitiveness in World Trade," NBER Books, National Bureau of Economic Research, Inc, number krav71-1, January.
    4. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    5. Martin Cincibuch & Jiří Podpiera, 2006. "Beyond Balassa-Samuelson: Real appreciation in tradables in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(3), pages 547-573, July.
    6. repec:spr:sptbec:978-3-662-49862-0 is not listed on IDEAS
    7. Edmund R Thompson, 2003. "A Grounded Approach to Identifying National Competitive Advantage: A Preliminary Exploration," Environment and Planning A, , vol. 35(4), pages 631-657, April.
    8. Mick Silver, 2007. "Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?," IMF Working Papers 07/121, International Monetary Fund.
    9. Ian Marsh & Stephen Tokarick, 1996. "An assessment of three measures of competitiveness," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(4), pages 700-722, December.
    10. Ian W. Marsh & Stephen Tokarick, 1994. "Competitiveness Indicators; A Theoretical and Empirical Assessment," IMF Working Papers 94/29, International Monetary Fund.
    11. Kravis, Irving B & Lipsey, Robert E, 1992. "Sources of Competitiveness of the United States and of Its Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 193-201, May.
    12. Gerald Epstein & James Burke, 2001. "Threat Effects and the Internationalization of Production," Working Papers wp15, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. Edmund R Thompson, 2003. "A grounded approach to identifying national competitive advantage: a preliminary exploration," Environment and Planning A, Pion Ltd, London, vol. 35(4), pages 631-657, April.
    14. Krugman, Paul R, 1996. "Making Sense of the Competitiveness Debate," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 17-25, Autumn.
    15. Giancarlo Gandolfo, 2016. "International Finance and Open-Economy Macroeconomics," Springer Texts in Business and Economics, Springer, edition 2, number 978-3-662-49862-0, February.
    16. Goldstein, Morris & Officer, Lawrence H, 1979. "New Measures of Prices and Productivity for Tradable and Nontradable Goods," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 413-427, December.
    17. Edouard B. Maciejewski, 1983. ""Real" Effective Exchange Rate Indices: A Re-Examination of the Major Conceptual and Methodological Issues (Les indices de taux de change effectifs "réels": un réexamen des princ," IMF Staff Papers, Palgrave Macmillan, vol. 30(3), pages 491-541, September.
    18. Martine Durand, 1986. "Method of Calculating Effective Exchange Rates and Indicators of Competitiveness," OECD Economics Department Working Papers 29, OECD Publishing.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Kordalska Aleksandra & Olczyk Magdalena, 2014. "Impact Of The Manufacturing Sector On The Export Competitiveness Of European Countries – A Spatial Panel Analysis," Comparative Economic Research, De Gruyter Open, vol. 17(4), pages 105-120, December.
    2. Gligor Delia Anca Gabriela, 2015. "The Effect Of Structural Funds On Regional Competitiveness In The New Eu Countries: The Case Of Romania And Bulgaria," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 225-235, January.
    3. Paulina Broniatowska & Aleksandra Majchrowska & Zbigniew ¯ó³kiewski, 2015. "Does minimum wage reduce youth employment on regional labour markets in Poland?," Lodz Economics Working Papers 1/2015, University of Lodz, Faculty of Economics and Sociology.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imk:studie:01-2010. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Nemitz). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.