Transcript Structural Changes in the Foreign Trade of Central and Eastern

STRUCTURAL CHANGES IN THE
FOREIGN TRADE OF THE CENTRAL
AND EASTERN EUROPEAN
COUNTRIES IN THE EUROPEAN
INTEGRATION PROCESS
Prof. Gabriela Carmen Pascariu
Ph.D. Ramona Tigănașu
Univ. “Al. I. Cuza” Iasi (Romania)
2015, ASEM, Chisinau
KEY QUESTIONS




What kind of relationship is established between economic integration,
trade specialization patterns, economic growth and convergence
Which is the pattern of specialization induced by the economic
integration (Association Agreement with comercial and EU internal
market dynamics) and what model of trade specialization has a high
catching-up potential for European developing economies?
Enlargement toward CEE confirm a center-periphery model type,
with faster recovery potential of gaps by the countries in Central
Europe and the accentuation of disparities in the Eastern countries or
on the contrary?
What kind of relevance for R. of Moldova?
STRUCTURE
 Theoretical
approaches and empirical evidences (lessons
of the past)
 Dynamics
of the trade specialisation of the Central and
Eastern European Countries (comparative approach)
(the methodology; main results: specialization indexes, the
relation growth/integration – trade specialization
 R.
Of Moldova and the European Integration:
economic challenges
PART I. THEORETICAL APPROACHES AND
EMPIRICAL EVIDENCES
EU ENLARGEMENT, NEW ECONOMIC
GEOGRAPHY AND THE TRADE PATERNS’S
CONVERGENCE




The free/internal market increases the disparities in an integration process in which
participate countries with different levels of development and different patterns of
trade specialization
The European integration process develops a centre-periphery pattern, by increasing
regional disparities along with the EU successive enlargements and integration
deepening (evolution towards EMU)
Convergence processes are stimulated by the periods of economic growth and take
place essentially on clusters of countries / regions
Convergence is possible, but it depends on the pattern of industrial and trade
specialization, public policy, public investments, quality of institutions, the
accumulation of knowledge, the quality of the intermediate inputs, innovation,
technological transfer
The convergence of the production and trade patterns
accelerate and soustain the increasing of the competitiveness,
the economic growth and the regional convergence
Specialization or diversification of trade?

I.
TWO MAIN CLASSICAL PERSPECTIVES
Intra-industry trade is the result of diversification of
production and trade, supporting a process of longterm
economic
convergence,
depending
on
intensification of integration
(Frankel and Rose,1998; Hausman and Klinger,
2007; Peterssen, 2005)
II. Further integration determine the increase of the
degree of specialization in correlation with the
comparative advantage, rising the center-periphery
gaps
(Balassa, 1965; Grubel and Loyd,1975; Dupuch
et al., 2004)
 NEW APPROACHES - THE EXISTENCE OF A "U" CURVE
IN THE RELATION INTEGRATION/GROWTH – TRADE
SPECIALIZATION



1st stage: specialization based on comparative advantage in small
number of industries (mostly inter-industry specialization)
2nd stage: diversification, with horizontal IIT and vertical IIT
(learning and information externalities, economies of scale,
diversification of domestic demand, inter-industry technological transfer
and spillover, diversification of the financial sector)
3rd stage: horizontal IIT specialization (economies of scale, search
for comparative advantages in technology, human capital, innovation)
Conclusion: as economies become more developed and more integrated into
the global/regional economy, tend to renounce to specialization (inverse
relationship between growth/integration - specialization)
Ben David, 1991; Dalum, 1998; Imbz and Waczing, 2003;
Agosin, 2007; Rossouw, 2008; Aditya and Roy, 2010, other
LESSONS OF THE PAST – (PREVIOUS
ENLARGEMENTS)



Increase in the degree of market integration
(increased share of the intra-EU trade)
convergence of the production and trade
specialization patterns
Increase in the degree of intra-industry
specialization of the European economies (more
important benefits for the peripheral economies)
RATIO OF INTRA AND EXTRA-TRADE EU
MANUFACTURING TRADE TO GDP (%)
DYNAMICS OF INTRA-INDUSTRY TRADE, (% OF INTRA-EU TRADE)
Country
1970
1980
1987
1994
France
76
83
83
68,9
UK
74
81
77
65,2
Belgium/Lux
69
76
77
65,2
Germany
73
78
76
67,4
Spain
35
57
64
65,2
Ireland
36
61
62
42,3
Italy
63
55
57
53,1
Danemark
41
52
57
40,0
Portugal
23
32
37
31,4
Greece
22
24
31
14,0
High rate
Medium rate
Low rate
PART II. EASTERN ENLARGEMENT:
DYNAMICS OF THE TRADE
SPECIALISATION OF THE CENTRAL AND
EASTERN EUROPEAN COUNTRIES
(COMPARATIVE APPROACH)
THE ENLARGEMENT TO EAST
– A NEW EU
PERIPHERALITY




With the Eastern enlargement, the population increased by
28% of the EU15; the GDP increased by 5% (11% to PPP)
With the Southern enlargement (Greece, Spain and Portugal),
the population increased by 22% of the EU9 and 10% of the
GDP (14% PPP);
Poland - the biggest of the NMS – has 10% of the EU-15
population and 2% of the GDP; Spain has, at the moment of
the accession, 14 % of the EU-9 population and 8% of the GDP
With the Eastern enlargement: very growth of disparities
- GDP/inhabitant from 1:5 for EU-15 to 1:7 for EU-27;
- 47% of the GDP in 1/7 of the surface
:TOWARDS A CORE PERIPHERY PATTERN?




→ the Eastern enlargement was expected to induce higher agglomeration
towards the core European regions, with two scenarios in terms of
international specialization: intra-industry in Central Europe and interindustry in Eastern Europe
The Central-European countries tend to concentrate capital intensive
activities, with high-skilled and productivity – the Spanish model (S.
Dupuch at all, 2004) based on two-way trade in vertically differentiated
products specialization)
The Eastern-European countries risk to concentrate natural resources
and labour-intensive industries, based on low skilled, low and medium
technologies (the Mediteranean model based on one-way trade
specialization according to traditional comparative advantages) For the next years, we risk to accentuate the core – periphery EU model,
especially if the return to the economic growth in the European
economies and a higher rate of growth in NMS will delay (or NOT)?
THE METHODOLOGY
Period of the analysis: 2000/2013
 Comparative approach: EU27/EU12; Central/Eastern
countries; Southern/Eastern enlargement

Krugman Specialisation Index
 Onicescu Index
 Grubel-Lloyd Intra-industry Specialization Index

KRUGMAN SPECIALIZATION INDEX FOR EXPORT: SOUTHERN VS. EASTERN EU
COUNTRIES (EU 27)
0,7000
0,63
0,63
0,58
0,57
0,6000
0,50
0,48
0,5000
0,55
0,51
0,52
0,49
0,4000
Greece
Portuga l
Spa i n
0,3000
0,2000
0,1000
0,05
0,05
0,04
0,03
0,03
0,03
0,04
0,06
0,08
0,04
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
0,0000
0,6000
0,5000
0,54
0,53
0,53
0,49
0,47
0,42
0,37
0,4000
0,37
0,34
Bul ga ri a
0,28
0,3000
Hunga ry
Pol a nd
Roma ni a
0,2000
0,1000
0,04
0,07
0,07
0,06
2000
2001
2002
0,0000
2003
0,03
0,06
0,05
2004
2005
0,03
0,03
0,05
2006
2007
2008
2009
KRUGMAN SPECIALISATION INDEX: OLD VS NMS (EU27)
Krugman Specialisation Index - EU New Members
Krugman Specialisation Index - EU Old Members
0.6
0.35
0.3
0.5
0.25
0.4
0.2
0.3
0.15
0.2
0.1
0.1
0.05
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bulgaria
Hungary
Lithuania
Poland
Romania
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
France
Germany
Italy
Netherlands
REMARKS
 After
-
-
-
-
2000, the Krugman Index generally
confirms:
Low level of convergence of the specialization
patterns for Bulgaria and Greece
A relatively high level of convergence for Spain,
Portugal, Romania, Ungaria and Poland
Decreasing of convergence for Hungary
Increasing the convergence for Romania of the
specialization pattern
Hungary, Poland, Romania –similar with Italy
Divergence’s increasing for Germany and
Netherlans
SPECIALISATION VS. DIVERSIFICATION: ONICESCU
CONCENTRATION INDICES - EU27 VS. EU12, 2000-2013
0.080
0.075
0.070
0.065
EU- new 12
EU-27
0.060
0.055
0.050
0.045
0.040
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
THE ONICESCU SPECIALISATION INDEX IN THE
CENTRAL AND EASTERN EU COUNTRIES
SOURCE: PROCESSING OF OWN DATABASE FROM COMEXT
0, 075
0, 070
0, 065
EU- new
12
0, 060
0, 055
Romania
0, 050
Bulgaria
0, 045
0, 040
0, 035
0, 030
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0, 150
0, 130
Hungary
0, 110
EU- new
12
0, 090
Poland
0, 070
0, 050
0, 030
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
REMARKS

Higher level of the export diversification for EU
27 (EU15)

Higher level of concentration for EU 12

Increasing of the export diversification for EU 12
(convergence of patterns)
DYNAMICS OF INTRA-INDUSTRY TRADE
Methodology:
- Grubel/Lloyd Index
- 16 categories of products
- EU27 vs. EU12 20002011
Textiles – L Tech
Agricultural products – L Tech
Food – L/M Tech
Iron and steel – L/MTech
Machinery and transport equipment –
M/H Tech
Automotive products – M/H Tech
Manufactures – L/M Tech
Chemicals – M/H Tech
Pharmaceuticals – H Tech
Clothing – L Tech
Integrated circuits and electronic
components – H Tech
Fuels and mining products – L Tech
Telecommunications equipment –H
Tech
Office and telecom equipment – H Tech
Fuels – L/M Tech
Electronic data processing and office
equipment – H Tech
GRUBEL-LLOYD INDEX, EU27 VS. EU12
2000-2011 (%)
100,0
95,0
91,0
90,6
90,1
90,6
90,6
89,7
90,0
89,0
89,5
88,5
88,5
88,0
87,3
EU-27
85,0
84,6
83,3
EU - new 12
80,0
82,0
82,3
2004
2005
83,9
83,9
82,7
83,2
79,2
77,7
75,0
75,7
74,0
70,0
2000
2001
2002
2003
2006
2007
2008
2009
2010
2011
GRUBEL-LLOYD INDEX, EU27 VS. EU12 20002011 (%)
95,0
90,0
85,0
80,0
EU - new 12
75,0
Rom ani a
68,3
70,0
70,5
65,6
65,0
Bul gari a
53,7
55,0
50,0
45,0
61,3
63,6
64,3
2009
2010
2011
81,5
81,9
81,0
57,3
60,0
51,2
51,7
50,9
51,0
59,8
53,8
57,8
57,0
55,8
53,9
47,2
50,5
49,0
46,4
45,7
2000
2001
47,7
40,0
2002
2003
2004
2005
2006
2007
2008
95,0
90,0
83,8
85,0
83,5
84,8
84,5
83,6
84,1
81,0
82,6
79,1
80,0
74,4
75,0
72,9
73,4
2005
2006
77,3
75,6
75,5
75,5
2007
2008
2009
76,2
Hungary
70,0
65,0
EU - new 12
60,0
Pol and
55,0
50,0
45,0
40,0
2000
2001
2002
2003
2004
2010
2011
GRUBEL LLOYD INTRA-INDUSTRY
SPECIALISATION INDEX ON DIFFERENT TYPES
OF PRODUCTS
Grubel Lloyd Intra-industry Specialisation Index - Agricultural
products
Grubel Lloyd Intra-industry Specialisation Index - Agricultural
products
120
120
100
100
80
80
60
60
40
40
20
20
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bulgaria
Hungary
Lithuania
Poland
Romania
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
France
Germany
Italy
Netherlands
Grubel Lloyd Intra-industry Specialisation Index Fuels and mining products
Grubel Lloyd Intra-industry Specialisation Index Fuels and mining products
120
120
100
100
80
80
60
60
40
40
20
20
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bulgaria
Hungary
Lithuania
Poland
Romania
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
France
Germany
Italy
Netherlands
Grubel Lloyd Intra-industry Specialisation Index Manufactures
Grubel Lloyd Intra-industry Specialisation Index Manufactures
120
120
100
100
80
80
60
60
40
40
20
20
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bulgaria
Hungary
Poland
Romania
Lithuania
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
France
Germany
Italy
Netherlands
Grubel Lloyd Intra-industry Specialisation Index Commercial Services
Grubel Lloyd Intra-industry Specialisation Index Commercial Services
120
120
100
100
80
80
60
60
40
40
20
20
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bulgaria
Hungary
Lithuania
Poland
Romania
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
France
Germany
Italy
Netherlands
REMARKS




The constantly increase of the intra-industry trade for
EU 12 and decreasing for EU27 (the diversification
process for EU15) for most categories of products (with
some exceptions)
Higher rates of intra-industry specializations for
Hungary and Poland
Lower rates of intra-industry specializations for
Hungary and Poland
Convergence of the trade patterns
TECNOLOGICAL INTENSITY (OWN
CALCULATION)
FACTORS INTENSITY (OWN CALCULATION)
REMARKS




Romania and Bulgaria – the prevalence of the low-tech
specializations, with a very reduced rate of the high-tech
specializations (similar to Portugal)
Poland and Hungary – the prevalence of medium-tech
specializations, similar to Spain (a good position for
Hungary, with a rate of the high-tech specializations
superior to the European average)
The increase in the intra-industry specialization in hightech and high-medium tech fields in the past decade
both for Central and Eastern economies
The convergence of the trade patterns in terms of the
factors intensity and the technological intensity
GENERAL CONCLUSIONS




Eastern EU peripheral territoriality is doubled by the
economic peripherality
The European integration process stimulates the
convergence of the production patterns and of the trade
specialization, with steady increase of the intra-industry
specializations
The Eastern-European countries undergo a slower
catching-up process than the Central-European
countries
The development and the convergence pattern is the
Spanish one, rather than the Mediterranean one, both
for the Central-European countries and for the EasternEuropean ones
PART III.
R. OF MOLDOVA AND THE EUROPEAN
INTEGRATION: ECONOMIC CHALLENGES
R. of Moldova:
DIFFICULTIES IN THE PROCESS OF
ECONOMIC INTEGRATION




Competitiveness Index 2015 (score 4 (max. 7)/rank 84, similar
to Ukraine); difficulties: market size, institutions, financial
markets development
Index of Economic Freedom, 2015: 57,5/rank 111, compared to
Ukraine, 46,9/rank162 (low scores: corruption, property rights,
labor freedom, financial freedom, investment freedom)
GDP/capita: 20-25% of GDP/capita in Romania
EU share in foreign trade: 53,26%, increasing (2013),
compared to 31% with Russia (Romania, Russia, Ukraine,
Italy - the main partners)
Prosperity Index
Romania
Ukraine
Moldova
100
Rank
50
70
92
Score
0,366
-0,092
-0,621
1
3,504
Norway
92
90
80
70
70
58
60
51
53
50
49
50
45
40
Rank
40 41
39
37
31
30
29
26
23
22
20
16
14
9
3
-10
27
25 24
18
10
0
Score
35
15
13
10
8
5
1
2
WEF, The Global Competitiveness Report 2015–2016
MOLDOVA:
Corruption Perceptions Index 2014
EU and Western Europe
Eastern Europe and Central Asia
WHAT CAN ROMANIA DO FOR R. OF MOLDOVA
Accelerating economic integration (trade, FDI)
 Intensifying cross-border cooperation programs
(priority: public administration and human capital)
 Boosting cooperation in education and research
(increasing Romania's contribution to human capital
formation)
 Stepping up cross-border mobility programs
 The transfer of expertise in implementing reforms
associated to the Association Agreement

WHAT CAN R. OF MOLDOVA DO FOR ITSELF?





Reforms leading to increased economic freedom (potentiating of
growth, health, education, environmental protection, poverty reduction,
general welfare)
Increasing economic competitiveness (macroeconomic stability,
institutions, infrastructure, human capital, market efficiency, financial
market development, innovation, SMEs)
Enhancing economic openness (trade integration, convergence of
production and trade patterns)
Stimulating FDI ...
Accelerating the "Europeanization" ... ..values, rule of law, democracy
... ..
HUMAN CAPITAL: education + mental and social transformations able
to intensify the sources of growth and development on long-term
ECONOMIC FREEDOM DEGREE – “Economic freedom allows people to
seek the comparative advantage, to start the entrepreneurial engine
which drives the market mechanism”
The return to itself !!!! What does R. of Moldova wants? Which is
the country project?
Thanks for your
attention!
Gabriela Carmen PASCARIU
Alexandru Ioan Cuza University of Iasi,
Romania
Centre for European Studies
www.cse.uaic.ro
Email: [email protected]