Working Paper: CEPR ID: DP1003
Authors: Laszlo Halpern
Abstract: The paper investigates the comparative advantage of Central and East European Countries (CEECs) through the analysis of commodity patterns of foreign trade. Due to rapid changes in production and trade structures the revealed comparative advantage may reflect both the old and the emerging capacities. Hence, outward processing trade, labour cost, human capital and foreign direct investment are also treated to assess the likely future trade pattern.
Keywords: Comparative Advantage; Central and Eastern Europe; FDI
JEL Codes: F14; P52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inherited production capacities (D24) | Trade reorientation from former CMEA countries to the EU (F15) |
| Lower hourly compensation costs in CEECs (J39) | Comparative advantage in labor-intensive products (F16) |
| Efficiency of restructuring economies (P21) | Future trade specialization of CEECs (F19) |
| Inflow of foreign direct investment (FDI) (F21) | Capitalizing on human capital advantages (J24) |
| Lack of FDI (F21) | Trade pattern dominated by natural resource-intensive and low-skill labor-intensive products (F14) |