Converging in divergent ways

Abstract

This paper focuses on intra-industry trade (IIT) between Central, Eastern and South-Eastern European (CESEE) countries and the EU-15. It assesses the determinants of intra-industry trade by combining a detailed product-level (HS-6) trade-flow database with country-level structural, monetary and institutional variables. Estimates are obtained with System-GMM and dynamic fractional response models. Our results suggest that structural factors driving IIT differ in the region, notably perceptions of corruption and the distance in the stock of physical capital from the EU-15. On the other hand, nominal variables such as the competitiveness of corporate taxation and the flexibility of exchange rate regimes contribute to the increase in intraindustry trade in the whole region.Dautovi c, Orszaghova and Schudel 7 Nine out of the top 10 bilateral IIT relationships worldwide in terms of IIT shares in total trade are between EU Member States (Fontagn e et al., 2005). Moreover, the share of two-way trade in the total trade of every individual country is more significant in intra-EU-15 trade than within non-EU markets (Fontagn e and

Is There Social or Monetary Dumping in the European Union? Manufacturing Competitiveness in Central and Eastern Europe

“…dollar or EUR) by applying current nominal exchange rates. Recently, some authors (Honkapohja & Korhonen, 2013;Rozmahel, Grochová, & Litzman, 2016;Dautović, Orszaghova, & Schudel, 2017) used this indicator to analyse relative industrial competitiveness of CEE economies.…”