Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap
Johannes Stephan
IWH-Sonderhefte,
No. 5,
2003
Abstract
This report summarises the results generated in empirical analysis within a larger EU 5th FP RTD-project on the determinants of productivity gaps between the current EU-15 and accession states in Central East Europe. The focus of research in this part of the project is on sectoral specialisation patterns emerging as a result of intensifying integration between the current EU and a selection of six newly acceding economies, namely Estonia, Poland, the Czech and Slovak Republics, Hungary and Slovenia. The research-leading question is concerned with the role played by the respective specialisation patterns for (i) the explanation of observed productivity gaps and for (ii) the projection of future potentials of productivity growth in Central East Europe.
For the aggregated level, analysis determines the share of national productivity gaps accountable to acceding countries’ particular sectoral patterns, and their role for aggregate productivity growth: in Poland, the Slovak Republic and Hungary, sectoral shares of national productivity gaps are considerable and might evolve into a ‘barrier’ to productivity catch-up.Moreover, past productivity growth was dominated by a downward adjustment in employment rather than structural change. With the industrial sector of manufacturing having been identified as the main source of national productivity gaps and growth, the subsequent analysis focuses on the role of industrial specialisation patterns and develops an empirical model to project future productivity growth potentials. Each chapter closes with some policy conclusions.
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FDI Subsidiaries and Industrial Integration of Central Europe: Conceptual and Empirical Results
Boris Majcen, Slavo Radosevic, Matija Rojec
IWH Discussion Papers,
No. 177,
2003
Abstract
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Vertical and horizontal patterns of intra-industry trade between EU and candidate countries
Hubert Gabrisch
IWH-Sonderhefte,
No. 2,
2003
Abstract
Trade between the European Union (EU) and the Transition Economies (TE) is increasingly characterised by intra-industry trade. The decomposition of intra-industry trade into horizontal and vertical shares reveals predominantly vertical structures with decisively more quality advantages for the EU and less quality advantages for TE countries whenever trade has been liberalised. Empirical research on factors determining this structure in a EU-TE framework lags behind theoretical and empirical research on horizontal and vertical trade in other regions of the world. The main objective of this paper is therefore to contribute to the ongoing debate on EU-TE trade structures by offering an explanation of vertical trade. We utilise a cross-country approach in which relative wage differences, country size and income distribution play a leading role. We find first that relative differences in wages (per capita income) and country size explain intra-industry trade when trade is vertical and completely liberalised, and second that cross-country differences in income distribution play no explanatory role. We conclude that EU firms have been able to increase their product quality and to shift low-quality segments to TE countries. This may suggest a product-quality cycle prevalent in EU-TE trade.
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Significant Progress in East German Machine Construction Industry
Siegfried Beer
Wirtschaft im Wandel,
No. 2,
2003
Abstract
The restructuring of the mechanical engineering industry of the new Länder has displayed clearly positive effects. Between 1997 and 2001, productivity and turnover have increased by about 25 %. Since mid 1999 the number of employees has also gone up again. Business surveys indicate an improvement in profitability. This positive development is due to an increase in competitiveness which is based on new product lines together with more effective innovation activities. Growth has also been enhanced by the enlargement and modernisation of the capital stock and a moderate movement of wages. Despite this progress the east German engineering industry as a whole does by far not reach the productivity figures of its west German counterpart. Differences explaining this gap are found in the product structure with dominating customer specific products and in the firm size with a smaller number of employees in the East.
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Innovation cooperation in East Germany - only a half-way success?
Jutta Günther
IWH Discussion Papers,
No. 170,
2003
Abstract
The paper focuses on the question whether enterprises that engage in innovation cooperation with external partners are more innovative and thus more productive than non-cooperating firms. A comparison between East and West Germany is being made. It shows that cooperating enterprises in East and West Germany are indeed more innovative than non-cooperating firms, but there remains a clear productivity gap between East and West German cooperating firms. Furthermore, in East Germany - different from West Germany - non-cooperating firms are even more productive than cooperating firms.
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Intra-industry trade and the productivity gap in the enlarged EU
Hubert Gabrisch
Wirtschaft im Wandel,
No. 16,
2002
Abstract
Trade between the European Union (EU) and the Transition Economies (TE) is increasingly characterised by intra-industry trade. The decomposition of intra-industry trade into horizontal and vertical shares reveals predominantly vertical structures with decisively more quality advantages for the EU and less quality advantages for TE countries whenever trade has been liberalised. Sizeable foreign direct investment did obviously not reduce the superiority of producers in the EU in terms of technology, capital and human capital. The productivity gap between the EU and TE countries remains. EU firms have been able to increase their product quality and to shift low-quality segments of production to TE countries. This may suggest a product-quality cycle prevalent in EU-TE trade. The testing of this model confirms the assumptions.
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Intra-industry trade between European Union and Transition Economies. Does income distribution matter?
Hubert Gabrisch, Maria Luigia Segnana
IWH Discussion Papers,
No. 155,
2002
Abstract
EU-TE trade is increasingly characterised by intra-industry trade. For some countries (Czech Republic), the share of intra-industry trade in total trade with the EU approaches 60 percent. The decomposition of intra-industry trade into horizontal and vertical shares reveals overwhelming vertical structures with strong quality advantages for the EU and shrinking quality advantages for TE countries wherever trade has been liberalised. Empirical research on factors determining this structure in an EU-TE framework has lagged theoretical and empirical research on horizontal trade and vertical trade in other regions of the world. The main objective of this paper is, therefore, to contribute to the ongoing debate over EU-TE trade structures, by offering an explanation of intra-industry trade. We utilize a cross-country approach in which relative wage differences and country size play a leading role. In addition, as implied by a model of the productquality
cycle, we examine income distribution factors as determinates of the emerging
EU-TE structure of trade flows. Using OLS regressions, we find first, that relative
differences in wages (per capita income) and country size explain intra-industry trade, when trade is vertical and completely liberalized and second, that cross country differences in income distribution play no explanatory role. We conclude that if increasing wage differences resulted from an increasing productivity gap between highquality and low-quality industries, then vertical structures will, over the long-term create significant barriers for the increase in TE incomes and lowering EU-TE income differentials.
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On the Future EU Cohesion Policies in Association States: the
Johannes Stephan
Wirtschaft im Wandel,
No. 15,
2001
Abstract
Not only are levels of economic development in the association states in Central
East Europe lower than the average EU-15. They furthermore exhibit significantly
different sectoral structures. Does this suggest that a large fraction of the develop-
ment gap can be explained by those sectoral differences? In its latest report on
cohesion policy, the EU Commission accordingly placed particular emphasis on
sectoral structures when contemplating future intervention policy in newly acceeding
members.
Our analysis shows, however, that the patterns of sectoral structures play only a
minor role as determinants of the lower level of development, measured here as
productivity gap. The explanatory power of sectoral differennces is significant only
in Slovakia. The suggestions made in the EU-report is not supported by our
analysis. The existing programmes appear to be well equipped to account for the
particuliarities in transition economies.
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Network activities and the productivity gap in East Germany: The role of agglomeration advantages
Anita Wölfl, Joachim Ragnitz
Wirtschaft im Wandel,
No. 13,
2001
Abstract
The article presents first some theoretical considerations about the connection between productivity and networking activities of enterprises. By operationalizing networks as an agglomeration of firms in a specific region, it is argued with respect to the East German economy that such networks have not yet developped in a sufficiently matter. Additionally, a “critical“ degree of agglomeration, from which networking activities lead to higher productivity, is missing in nearly all East German regions.
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