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Competitiveness of CEE Industries: Evidence From Foreign Trade Specialization and Quality Indicators


  • Peter Havlik

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Michael Landesmann

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer

    () (The Vienna Institute for International Economic Studies, wiiw)


This paper analyses the competitiveness of the manufacturing industry in the CEE candidate countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) with special emphasis on trade with the European Union during the second half of the 1990s. Changing specialization patterns, the evolution of sectoral trade balances and market shares, as well as price/quality gaps at detailed product level, are used as indicators of trade competitiveness. The CEE candidate countries' market share in extra-EU manufacturing imports grew from 9.5% in 1995 to 11.4% in 1999, the EU export surplus in manufacturing trade is diminishing. Candidate countries' exports to the EU have been increasingly specialized on a few key industries textiles and textile products, basic metals and fabricated metal products, electrical & optical equipment and transport equipment; in the Baltic states also on wood and wood products. The manufacturing industry in Slovakia features the highest number of branches with a trade surplus while the weakest competitive position in trade with the EU has been identified for the manufacturing industry in Slovenia, Poland and Latvia. Textiles, wood products, basic metals and furniture were identified as branches where candidate countries enjoy revealed comparative advantages (RCAs) in trade with the EU. Apart from chemicals, rubber and plastic products, nearly all candidate countries show negative RCAs also in pulp and paper, machinery and equipment n.e.c. and electrical and optical equipment. Technology-driven industries account for a growing share of exports in nearly all candidate countries, labour-intensive industries have growing export shares in Bulgaria, Romania and the Baltic states. The representation of labour-intensive industries in candidate countries' exports to the EU is still - with the notable exception of Hungary - much bigger than in the present EU member states; the representation of technology-driven industries in candidate countries' exports to the EU is usually smaller (Hungary, the Czech Republic, Estonia and Slovakia are exceptions). Nevertheless, the initial export specialization pattern of CEE candidate countries has nearly completely reversed in many candidate countries export specialization is evolving towards more sophisticated and less capital-intensive industries. Labour-intensive industries accounted for a major part of competitive export gains in Bulgaria, Latvia, Lithuania and Romania. Finally, using very detailed information on export unit prices, an analysis of the 'quality' of candidate countries' export products shows that there were substantial price gaps between CEE producers and EU incumbents over the 1990s. However, some countries have closed these gaps (Hungary and Slovenia in particular), while others maintain very substantial price gaps (Bulgaria and Romania in particular). The largest price/quality gaps are found in 'technology-driven' and 'mainstream' industries, as well as in 'high-skill-intensive branches'; the lowest price gaps in capital-intensive and low-skill-intensive branches. Over time, however, the strongest 'quality catching-up' can be observed in 'technology-driven' and 'high-skill-intensive' industries. Again, Hungary occupies the position of an 'outlier' amongst the candidate countries, especially with regard to 'quality catching-up' in the 'technology-driven' and skill-intensive industries.

Suggested Citation

  • Peter Havlik & Michael Landesmann & Robert Stehrer, 2001. "Competitiveness of CEE Industries: Evidence From Foreign Trade Specialization and Quality Indicators," wiiw Research Reports 278, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:rpaper:rr:278

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    Cited by:

    1. repec:mes:emfitr:v:52:y:2016:i:4:p:904-922 is not listed on IDEAS
    2. Onaran, Özlem, 2007. "Jobless growth in the Central and Eastern European Countries. A country specific panel data analysis for the manufacturing industry," Department of Economics Working Paper Series 372, WU Vienna University of Economics and Business.
    3. Gács, János, 2002. "Structural Change and Catching Up: Experience of the Ten Candidate Countries," MPRA Paper 60339, University Library of Munich, Germany.
    4. Olczyk, Magdalena, 2008. "The competitiveness of Polish manufacturing export on the EU market in the years 2004-2006," MPRA Paper 33651, University Library of Munich, Germany, revised 2008.
    5. Egert, Balazs & Drine, Imed & Lommatzsch, Kirsten & Rault, Christophe, 2003. "The Balassa-Samuelson effect in Central and Eastern Europe: myth or reality?," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 552-572, September.
    6. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Michael A. Landesmann, 2003. "Structural features of economic integration in an enlarged Europe: patterns of catching-up and industrial specialisation," European Economy - Economic Papers 2008 - 2015 181, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    8. Jože P. Damijan & Matija Rojec & Maja Ferjančič, 2011. "The Growing Export Performance of Transition Economies: EU Market Access versus Supply Capacity Factors," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(4), pages 489-509, December.
    9. Gabor Bekes & Balazs Murakozy & Zsuzsa Munkacsi & Gabor Oblath, 2013. "Unit Values, Unit Labor Costs and Trade Performance in Four Central European Countries," IEHAS Discussion Papers 1329, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    10. Jože Damijan & Črt Kostevc & Matija Rojec, 2015. "Bright past, shady future? Past and potential future export performance of CEE countries in a comparative perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 27(3), pages 306-335, September.
    11. János Gács, 2003. "Transition, EU Accession and Structural Convergence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 30(3), pages 271-303, September.
    12. O. Kostoska & P. Mitrevski, 2016. "Evaluating foreign trade specialization and qualitative competitiveness of a transition economy: the case of Macedonia," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(3), pages 633-655, August.
    13. Joze P. Damijan & Matija Rojec & Maja Ferjancic, 2008. "Growing export performance of transition economies: EU market access versus supply capacity factors," LICOS Discussion Papers 20208, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    14. Facchini, Giovanni & Segnana, Maria Luigia, 2003. "Growth at the EU periphery: the next enlargement," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(5), pages 827-862.
    15. Sabina Silajdzic & Eldin Mehic, 2016. "Absorptive Capabilities, FDI, and Economic Growth in Transition Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(4), pages 904-922, April.
    16. Matija Rojec & Janez Sustersic & Bostjan Vasle & Marijana Bednas & Slavica Jurancic, 2004. "The rise and decline of gradualism in Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 16(4), pages 459-482.
    17. Stephan, Johannes, 2003. "EU Accession Countries’ Specialisation Patterns in Foreign Trade and Domestic Production - What can we infer for catch-up prospects?," IWH Discussion Papers 184, Halle Institute for Economic Research (IWH).
    18. Balazs Egert & Amina Lahrèche-Revil, 2003. "Estimating the Fundamental Equilibrium Exchange Rate of Central and Eastern European Countries; The EMU Enlargement Perspective," Working Papers 2003-05, CEPII research center.
    19. Sebastian Ion CEPTUREANU, 2015. "Competitiveness Of Smes," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 5(2), pages 55-67, June.
    20. Vasily Astrov, 2001. "Structure of Trade in Manufactured Products Between Southeast European Countries and the European Union," wiiw Balkan Observatory Working Papers 14, The Vienna Institute for International Economic Studies, wiiw.
    21. Soós, Károly Attila, 2002. "Az átmeneti gazdaságok EU-exportja nemzetközi összehasonlításban, 1993-2000
      [International comparison of EU exports by transitional economies, 1993-2000]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1063-1080.

    More about this item


    EU candidate countries; competitiveness; trade specialization; catching-up; structural and technological change;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects


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