WIIW Structural Report (December 1997)

Structural Developments in Central and Eastern Europe

(by Michael Landesmann et al.)
 

Contents

Executive Summary - p. i

Introduction to WIIW’s first Structural Report
by Michael Landesmann - p. 1

1 The two phases since the beginning of the transition: from ‘passive’ to ‘active restructuring’ - p. 2
2 Developments on the labour markets - p. 5
3 The complicated evolution of long-term comparative advantages - p. 6
4 The evolution of labour costs and productivity - p. 7
5 The role of FDI and foreign corporate involvement - p. 9
6 The balance of payments and the sustainability of catching up - p. 10
References - p. 10
 
Chapter 1
Patterns of Structural Change in Manufacturing in the Transition Countries
by Waltraut Urban - p. 11
Introduction - p. 11
1 Speed of structural change - p. 12
2 Winners and losers of transition among individual industries - p. 14
 2.1  Winners and losers 1990-92 - p. 14
 2.2 Winners and losers 1993-95 - p. 18
3 Foreign trade and patterns of change in production - p. 20
 3.1 Foreign trade as an engine of growth in manufacturing - p. 24
 3.2 Deviations from the observed general pattern
('outliers') - p. 25
4 The role of foreign direct investment in industrial restructuring - p. 27
5 Industrial structures in the CEECs as compared to EU countries - p. 34
 5.1 Structural differences between the CEECs and the West in 1989 - p. 34
 5.2 Convergence or divergence of industrial profiles after 1989 - p. 35
6 Major industries in the CEECs and intra-regional specialization - p. 38
 6.1 Top industries at the beginning of transition and thereafter - p. 38
 6.2 Intra-regional specialization - p. 38
Conclusions - p. 41
References - p. 43
Annex - p. 45
 
Chapter 2
Structural Change in CEEC Labour Markets
by Hermine Vidovic - p. 51
Introduction - p. 51
1 Employment and unemployment - p. 51
2 Employment changes across sectors - p. 56
3 Comparison of employment structures between CEECs and selected EU countries, 1993 - p. 60
4 The role of the services sector in absorbing employment from other sectors - p. 61
Conclusions - p. 66
References - p. 68
 
Chapter 3
Trade Restructuring and Export Competitiveness
by Peter Havlik - p. 69
Introduction - p. 69
1 Trade reorientation and restructuring - p. 69
2 Changes in the commodity structure of CEEC exports - p. 75
3 The CEECs' most competitive export industries - p. 80
4 Factor content of CEEC exports to the EU - p. 81
5 Patterns of CEECs' revealed comparative advantages - p. 85
References - p. 88
Annex - p. 89
 
Chapter 4
Trends in Wages, Productivity and Labour Costs
by Peter Havlik - p. 97
Introduction - p. 97
1 Recent developments in wage levels - p. 97
2 Changes in productivity and unit labour costs - p. 100
3 Aggregate productivity and ULC levels in international comparison - p. 108
4 Productivity and ULC levels in manufacturing industry - p. 111
5 Differentiation of cost conditions in Europe: an Asia – Europe comparison - p. 116
Conclusions - p. 120
References - p. 129
 
Chapter 5
Vertical Product Differentiation in EU Markets:
the Relative Position of East European Producers
by Michael Landesmann and Johann Burgstaller - p. 131
1 Introduction - p. 131
2 Methodology - p. 132
 2.1 Quality/price gaps - p. 132
 2.2 Product quality segmentation - p. 133
 2.3 Some cross-industry regressions - p. 134
3 Discussion of the results - p. 135
 3.1 Results for price/quality gaps - p. 135
 3.2 Results for product quality segmentation - p. 137
 3.3 Results of cross-industry regressions - p. 138
 3.4 Shifts in price/quality gaps and exchange rate movements - p. 140
4 Outward processing - p. 141
5 Concluding remarks and further research - p. 143
Annex - p. 145
 
Chapter 6
Foreign Direct Investment in CEEC Manufacturing
by Gábor Hunya - p. 173
1 Overall size of foreign direct investment in Central and  East European countries - p. 173
2 Importance of manufacturing as FDI target - p. 174
3 Foreign ownership in CEEC manufacturing - p. 176
4 Branch-specific features of manufacturing FIEs - p. 179
 4.1 Industry specialization by nominal capital, FDI capital - p. 179
 4.2 Foreign penetration of manufacturing industries measured by sales shares of FIEs - p. 181
 4.3 Exports of manufacturing FIEs - p. 183
 4.4 Investment activities of FIEs - p. 189
5 Outlook - p. 191
References - p. 193
Annex   195
 
Chapter 7
Balance-of-payments Structures and Macroeconomic Growth
in Central and Eastern Europe
by Josef Pöschl and Michael Landesmann - p. 205
1 Comparing CEECs' balance-of-payments structures - p. 207
 1.1 A two-entries system monitors transactions with the rest of the world - p. 207
2 Balance-of-payments developments - p. 209
 2.1 Increasing balance-of-payments imbalances raise major concern - p. 209
 2.2 Transition: Trade reorientation in difficult circumstances - p. 210
 2.3 Worsening current accounts accompany economic recovery - p. 213
 2.4 The impact of exchange rates upon the balance of payments was very substantial - p. 215
3 The non-goods accounts of the balance of payments - p. 217
 3.1 The significance of trade in services varies widely - p. 217
 3.2 Income flows reflect Hungary’s successful accumulation of FDI - p. 220
 3.3 High transfers and unclassified transactions characterize Poland’s balance of payments - p. 221
 3.4 The capital accounts: CEECs still record only modest financial investment flows - p. 222
 3.5 Vulnerability to balance-of-payments crises - p. 223
Conclusions - p. 225
References - p. 228
Annex - p. 229
 
 

WIIW Structural Report, M. Landesmann et al.: Structural Developments in Central and Eastern Europe. WIIW Report 1997, December 1997, xix + 239 pp. including 100 Tables and 43 Figures, US$ 950.-/ATS 12,000.-

For orders please contact Ms. Ursula Straka, WIIW, tel: (+43 1) 533 66 10-11, fax: (+43 1) 533 66 10-50, e-mail: straka@wiiw.ac.at

Back to Research Reports