Work detail

Consistency of competitiveness rankings in post-communist EU states: A comparison.

Author: Bc. Vojtěch Seman
Year: 2009 - summer
Leaders: PhDr. Zdeněk Kudrna PhD.
Consultants:
Work type: Bachelors
Language: English
Pages: 53
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Abstract: Following the collapse of communist regimes and their related trade arrangements (CMEA), the ten post-communist EU countries had to adapt to global markets and (re)discover their competitive industries. Different countries followed on different paths of industrial transformations and developed different patterns of specialization. We describe the process of search for comparative advantages and look how it is reflected in indicators of competitiveness. We compare two indicators – IMD competitiveness indicator, which includes high number of variables, and a simple indicator derived from the structure of industrial exports. We observe that the two approaches generate competitiveness rankings that are not fully consistent. We explore the reasons behind ranking inconsistencies, while comparing and discussing the two approaches to measuring of competitiveness. We conclude that the differences in ranking in case of Baltic countries are partially explained by exclusion of trade in services from available export data and partially by recent experience of significant economic growth causing an optimistic bias in subjective evaluations. In case of Poland and Slovakia, explanation is found in recent expansion of car industry that moves them up in export ranking and prevalent long-term unemployment that moves them down in IMD ranking. Finally, we make several observations on the likelihood of FDI relocation in case that the key comparative advantage of the post-communist EU member states (EU10) fades away.

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