Accession Countries' Comparative Advantage in the Internal Market: A Trade and Factor Analysis

49 Pages Posted: 24 Sep 2007

See all articles by Ville Kaitila

Ville Kaitila

ETLA, Research Institute of the Finnish Economy

Date Written: May 18, 2007

Abstract

We analyse trade between Central and Eastern European (CEE) countries and the European Union during 1993-1998 using three methods. First, we calculate the share of intra-industry trade to determine the extent to which two countries trade in similar products. Second, we calculate similarity indices to determine the extent to which the structure of the exports of two countries is similar to a third country. Third, we calculate the revealed comparative advantage of CEE countries in the EU internal market and analyse the results in a two-dimensional space showing relative labour-skills and capital-intensity. We also depict how the factor intensity of comparative advantage has changed since 1993. With this last approach, we find that the comparative advantage of various CEE countries have developed in quite different directions. Some countries have evolved comparative advantage in industries requiring much skilled labour, while others have moved in the opposite direction. This differentiation is also reflected in degrees of capital intensity. A few CEE countries have not shifted in this two-dimensional space.

Keywords: EU, eastern enlargement, comparative advantage, factor intensity

Suggested Citation

Kaitila, Ville, Accession Countries' Comparative Advantage in the Internal Market: A Trade and Factor Analysis (May 18, 2007). Available at SSRN: https://ssrn.com/abstract=1016033 or http://dx.doi.org/10.2139/ssrn.1016033

Ville Kaitila (Contact Author)

ETLA, Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki
Finland

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