Fishing in the Same Pool: Export Strengths and Competitiveness of China and Central, Eastern and Southeastern Europe at the EU-15 Market

Posted: 18 Nov 2015

See all articles by Maria Silgoner

Maria Silgoner

Oesterreichische Nationalbank (OeNB)

Katharina Steiner

Oesterreichsiche Nationalbank (OeNB)

Julia Wörz

Oesterreichische Nationalbank (OeNB)

Christian Schitter

University of Graz

Date Written: November 12, 2014

Abstract

We investigate the impact of the emergence of China as a global competitor on the trade performance of Central, Eastern and Southeastern European (CESEE) countries at the EU-15 market, i.e. the fifteen EU members as of 1995. The paper takes a comprehensive approach in terms of empirical methods and data. We analyze export growth, export market shares, extensive and intensive margins and the dynamics in the number of joint trade links (Dynamic Trade Link Analysis), applying highly disaggregated data at the 6 digit HS level over the period 1995–2010. We show that the most contested markets are those for capital goods and transport equipment, product categories where both regions have gained market shares and comparative advantage. We show that the number of trade links at the product level where both regions are active has increased substantially, indicating intensified competition. At the same time hardly any trade links were lost, which points against cut-throat competition between CESEE and China. The decomposition of export growth along the extensive versus the intensive margin shows that in line with the literature, the deepening of already existing trade relationships (i.e. the intensive margin) contributed most strongly to export growth in both regions, whereas the contribution of new trade links (i.e. the extensive margin) had only a minor contribution, apart from the instance of EU accession, which boosted the extensive margin considerably. We further decompose intensive margin growth into demand related structural effects and a supplier related competitiveness effect. Both the CESEE region and China successfully intensified their trade linkages above all as a result of their outstanding competitiveness as shown by the econometric shift-share analysis. While this suggests that both regions pursue a suitable export strategy, further diversification of production towards promising new industries and markets will become increasingly crucial for both, especially in face of projected slower EU-15 market growth in the longer run.

Keywords: competitiveness, trade, sectoral market shares, shift-share analysis, Central, Eastern and Southeastern Europe, China

JEL Classification: F14, F15, O57

Suggested Citation

Silgoner, Maria and Steiner, Katharina and Wörz, Julia and Schitter, Christian, Fishing in the Same Pool: Export Strengths and Competitiveness of China and Central, Eastern and Southeastern Europe at the EU-15 Market (November 12, 2014). China Economic Review, Vol. 32, 2014. Available at SSRN: https://ssrn.com/abstract=2691283

Maria Silgoner (Contact Author)

Oesterreichische Nationalbank (OeNB)

Otto-Wagner-Platz 3, PO Box 61
Vienna,
1010 Vienna, A-1011
Austria

Katharina Steiner

Oesterreichsiche Nationalbank (OeNB) ( email )

Otto-Wagner-Platz 3, PO Box 61
Vienna, A-1011
Austria

Julia Wörz

Oesterreichische Nationalbank (OeNB) ( email )

Otto-Wagner-Platz 3, PO Box 61
Vienna,
1010 Vienna, A-1011
Austria

Christian Schitter

University of Graz ( email )

Austria

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