Working Paper: CEPR ID: DP736
Authors: Thomas Michael Tamas Revesz; Paul Hare; Gordon Hughes
Abstract: Using an RAS update to 1990 of an 86-sector input-output table for Hungary in 1986, and corresponding data on world-to-domestic price ratios for 1990, this paper calculates domestic resource costs (DRCs) for Hungarian industries. The disaggregated results are compared with corresponding estimates for a more aggregated model using a 21-sector input-output table. The paper discusses limitations of the data, but we find that the main calculations are quite robust, since very similar rankings of sectors are obtained under a variety of conditions. Hungary's trade relationships and constraints on trade make it uncertain whether particular sectors, like agriculture, should be treated as tradable or non-traded. We therefore obtain results for both possibilities. Finally, the paper analyses the likely impact of the recently concluded Association Agreement between Hungary and the EC on Hungary's competitiveness, finding that some sectors will be strengthened, e.g. forestry, agriculture and food processing; and others will face more difficult conditions, e.g. extraction. Other sectors are not greatly affected, so consumer goods, much of chemicals, and metallurgy remain uncompetitive.
Keywords: Hungary; Industrial Competitiveness; Domestic Resource Cost; EC
JEL Codes: F14; L60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| association agreement with the EC (F15) | competitiveness of forestry, agriculture, and food processing sectors (L73) |
| association agreement with the EC (F15) | competitiveness of metallurgy and certain extraction industries (L61) |
| low DRCs (Y10) | high competitiveness (L13) |
| high DRCs (Y10) | low competitiveness (L19) |
| structural adjustments and improved productivity (O49) | competitiveness of food processing sector (L66) |
| association agreement with the EC (F15) | differential effects on sectoral competitiveness (F12) |