Economic growth, structural change and quality upgrading in New Member States

SSRN Electronic Journal 01/2009; DOI: 10.2139/ssrn.1890765
Source: RePEc


The purpose of this research is to present the recent developments concerning structural change and productivity growth in New Member States and the role played in such process by country specific factors. We focus on ten countries (NMS-10) which joined the EU in 2004 and analyze productivity dynamics of their labor structures between the years 1995 and 2005 in a comparative setting versus EU-15 economies. NMS-10 have gone through a rapid process of economic restructuring and its speed has been positively related to the economic development. However, shift-share analysis of productivity growth indicates that changes in value added per hour worked were due mainly to positive developments (rising productivity) within single sectors and only to a lower extent to the shift towards higher productivity sectors. The process of a structural change and productivity growth has been characterized by beta convergence type mechanism, with public spending (especially on education, social protection, public order and safety) and trade (in particular with more advanced EU-15 countries) promoting overall and intra-industry productivity upgrading.

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    ABSTRACT: In this paper we examine the reasons behind the remarkable export performance of transition economies in the last two decades. Following Redding and Venables (2004, 2004a) and Fugazza (2004), we decompose export performance into the gains due to the advantageous access to foreign markets and export gains on the side of the internal supply capacity. We find that size of the economy, inward FDI penetration, most notably in the manufacturing sector, export unit values, denoting the structural changes of CEECs’ exports, and the quality of institutions and infrastructure had significant positive impact on exporting country’s supply capacity, while productivity had a negative impact. The latter is mostly due to unfavourable trends in ULC since the accession. Unlike in EU-15 and BRIC countries, the internal supply capacity is becoming decreasingly important as base of CEECs export performance. At the same time, trends in cost competitiveness are worsening relative to competing countries, while benefits of EU accession have been mostly exploited. This may compromise the CEECs’ future export growth.
    SSRN Electronic Journal 01/2013; 27(3). DOI:10.2139/ssrn.2285388
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    ABSTRACT: The article aims to empirically validate three questions. Have productivity differences in European manufacturing been increasing or diminishing and what has been the situation in Central and Eastern Europe countries? Are productivity differences homogenous over time and across manufacturing industries? What is the role of the internal structure of manufacturing for convergence? For this purpose, an analysis of σ- and β-convergence in 11 manufacturing industries has been conducted, making use of shift-share decomposition techniques. A complex view of catching-up is demonstrated with heterogeneity over time and across industries. Convergence occurred in Western Europe until approximately 1990, but since then disparities have been increasing and CEE countries were the only ones catching up. Convergence took place predominantly in medium-tech industries, while both low-tech and high-tech industries experienced divergence. Structural differences account for a minor share of the productivity disparities; however, changes in employment structures and productivity together led to the formation of two clubs of countries: low-tech, low productivity and high-tech, high productivity countries.

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