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European Trade and Foreign Direct Investment U-Shaping Industrial Output in Central and Eastern Europe: Theory and Evidence

Author

Listed:
  • Mr. Patrick P. Walsh
  • Mr. Alexander Repkine

Abstract

We examine industrial output in Bulgaria, Hungary, Poland, and Romania during 1989–95 in terms of pretransitional product trade orientation. The growth of EU-oriented output within sectors of industry, ex-post trade, and market liberalization, is modeled as foreign direct investment induced Schumpeterian (vertical) waves of product innovation. The growth of non-EU-oriented output within sectors is modeled as unobservable deterministic heterogeneity. The results indicate that the gap observed in industrial output performance when comparing Eastern European to former Soviet countries is mainly explained by the inherited presence of EU-oriented production and its unconstrained growth over the transition period.

Suggested Citation

  • Mr. Patrick P. Walsh & Mr. Alexander Repkine, 1998. "European Trade and Foreign Direct Investment U-Shaping Industrial Output in Central and Eastern Europe: Theory and Evidence," IMF Working Papers 1998/150, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1998/150
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    Citations

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    Cited by:

    1. Faggio, Giulia, 2007. "Job destruction, job creation and unemployment in transition countries: what can we learn?," LSE Research Online Documents on Economics 19716, London School of Economics and Political Science, LSE Library.
    2. Doyle, Orla & Walsh, Patrick Paul, 2005. "Did Political Constraints Bind During Transition? Evidence from Czech Elections 1990-2002," IZA Discussion Papers 1719, Institute of Labor Economics (IZA).
    3. Faggio, Giulia & Konings, Jozef, 1999. "Gross Job Flows and Firm Growth in Transition Countries: Evidence Using Firm Level Data on Five Countries," CEPR Discussion Papers 2261, C.E.P.R. Discussion Papers.
    4. Köke, Jens & Salem, Tanja, 2000. "Corporate finance and restructuring: evidence from Central and Eastern Europe," ZEW Discussion Papers 00-21, ZEW - Leibniz Centre for European Economic Research.
    5. repec:lic:licosd:11402 is not listed on IDEAS
    6. repec:tcd:wpaper:tep15 is not listed on IDEAS
    7. McGoldrick, Peter & Walsh, P. Paul, 2007. "Successful Factor Market Competition Pre-Privatisation? China`s eclectic.com," Research Technical Papers 3/RT/07, Central Bank of Ireland.
    8. Henri Bezuidenhout & Wim Naudé, 2008. "Foreign Direct Investment and Trade in the Southern African Development Community," WIDER Working Paper Series RP2008-88, World Institute for Development Economic Research (UNU-WIDER).
    9. Goran Vuksic, 2005. "Impact of foreign direct investment on Croatian manufacturing exports," Financial Theory and Practice, Institute of Public Finance, vol. 29(2), pages 131-158.
    10. Magdalena RĂDULESCU & Luminiţa ŞERBĂNESCU, 2012. "The Impact of FDIs on Exports, and Export Competitiveness in Central and Eastern European Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 2(1), pages 1-5, February.

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