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

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

ABSTRACT 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; DOI:10.2139/ssrn.2285388

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Aleksandra Parteka