Changes in the Competitive Position of the Czech Republic, Hungary and Poland in the EU Market

41 Pages Posted: 25 Jul 2009

See all articles by Iga Magda

Iga Magda

Warsaw School of Economics (SGH)

Anna Wziatek-Kubiak

Polish Academy of Sciences

Date Written: January 2006

Abstract

This paper aims at comparing the uneven process of changes in competitiveness among three accession countries' manufacturing industries, the Czech Republic, Hungary and Poland, during the period prior to their EU membership (1996-2003). It demonstrates that the three countries improved competitiveness in the majority of their manufacturing industries. However, these changes were differentiated across time, among industries, in terms of the quality of segments and between the three countries overall. A drop in the productivity gap between the manufacturing industries of the three accession and the incumbent EU countries played the major role in improvement in competitiveness. It determined the drop in relative unit labour costs. The paper shows that changes in competitive advantages of a given country's industry reflect changes in relative (as compared to foreign) productivity rather than differences in level and changes in productivity among industries of a given country. The dynamics and levels of productivity among the Czech and Polish larger winners were lower than the manufacturing average of both countries. However, since the improvement in productivity in these industries in both countries was larger than in their incumbent EU counterparts, the former pushed the latter out of the EU market. Poland's and the Czech Republic's export specialisation in less productive industries implies that their export expansion to the EU would result in lower than potential economic growth in both countries. The paper shows that Smith's law of absolute advantages tends to determine changes in market share.

Keywords: competitiveness, productivity, transition economies, manufacturing industry, EU integration

Suggested Citation

Magda, Iga and Wziatek-Kubiak, Anna, Changes in the Competitive Position of the Czech Republic, Hungary and Poland in the EU Market (January 2006). CASE Network Studies and Analyses No. 317. Available at SSRN: https://ssrn.com/abstract=1438067 or http://dx.doi.org/10.2139/ssrn.1438067

Iga Magda (Contact Author)

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

HOME PAGE: http://www.sgh.waw.pl/prywatne/im20431/kontakt/

Anna Wziatek-Kubiak

Polish Academy of Sciences ( email )

Institute of Economics
Warsaw
Poland

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