Working Paper: CEPR ID: DP772
Authors: Laszlo Halpern
Abstract: The collapse of the CMEA completed the Hungarian trade reorientation during the second half of the 1980s. Panel model estimations of trade reorientation reveal that cost efficiency, export subsidy and foreign demand played important and varying roles between 1981 and 1990. During the last two years cost efficiency ceased to exert an influence on the process, and subsidies were active instead.In 1991 the recession and the increased costs of trade reorientation led to a fall in the profitability of the corporate sector and exporting firms. Exporting firms with fast-growing exports had larger profits and they managed to combine the growth of exports with the expansion of domestic sales. Foreign capital and the new corporate forms have not yet ensured better performance.
Keywords: Trade Reorientation; Hungary; Export Performance; CMEA; Profitability
JEL Codes: F14; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade reorientation (F14) | changes in sales structure (L16) |
| trade reorientation (F14) | profitability (L21) |
| falling rouble export demand (F14) | lower export performance (F14) |
| dollar export growth (F10) | profitability (L21) |