Article

 

Structural upgrading of manufacturing industry in transition countries: evidence from foreign trade indicators (p.39-79)

by

Ekaterina Ivleva, Russian-European Centre for Economic Policy

Irina Levina, Russian-European Centre for Economic Policy

Karoly Attila Soos, Russian-European Centre for Economic Policy

Keywords : Manufacturing, transition countries, foreign trade indicators

JEL classification : F14 , L60 , P27

Abstract

This paper aims to reveal and compare the trends in qualitative development of manufacturing industry of selected transition countries over the transition period, and to find out the most important institutional and economic factors that determined these trends. The research is largely based on the prerequisite that performance of a country in the world markets reflects the state of development (i.e. competitiveness) of national industry. The authors use indicators of intraindustry trade, intensity of trade in technological goods, the proportion between exports and imports of high-tech products, export specialization, and relative export and import unit values as proxy variables to assess the technological advancement and quality of manufacturing exports from selected CEE and FSU transition countries to the countries of the European Union. The data used is yearly for 1993-2000 from Eurostat trade database. The results show that different groups of transition countries follow different patterns of trade development with the EU countries. The authors use the aforecited indicators to construct by means of principal components method a synthetic indicator, which assures intertemporal and cross-sectional comparability of countries’ performance. Further regression analysis is applied to find the possible determinants of faster/slower upgrading. The estimates show that the most important factors, which influence patterns of industrial upgrading (and, respectively, trade development), are the development of banking system, investment activity, financial integration into the global economy, lower level of protectionism and institutional stability.