Choosing Right from Wrong: Industrial Policy and (De)industrialization in Central and Eastern Europe

Abstract

Tijekom protekla dva i pol desetljeća ekonomski krajobraz zemalja središnje i istočne Europe prošao je nekoliko valova transformacije. Propast tradicionalnih industrija i uspon uslužnog sektora tijekom 1990-ih usmjerili su ekonomsku strukturu prema procesu deindustrijalizacije. Događaji narednih godina u nekim zemljama regije otvorili su prostor za rađanje novih industrija dok je u drugim nastanak novih industrija bio slabijeg intenziteta. Ovakav razvoj događaja može se pripisati procesu industrijskog restrukturiranja i industrijskim politikama. Recentni porast svijesti o važnosti industrijskog razvoja za rast i blagostanje nacija zahtijeva razumijevanje uzroka promjena u ekonomskoj strukturi zemalja središnje i istočne Europe. Istraživanjem su identificirane dvije skupine zemalja označene kao reindustrijalizirajuće i deindustrijalizirajuće. Promjene konkurentnosti identificirane su kao ključni pokretač takvog ishoda. Rezultati istraživanja ne pružaju potporu horizontalnom pristupu ekonomske politike. Reindustrijalizacija je uglavnom pokretana poboljšanjem proizvodnosti izvoza u sektorima slabijeg intenziteta znanja i tehnologije u skladu s položajem analiziranih zemalja u globalnom lancu dodane vrijednosti.Over the past two and a half decades, the economic landscape of Central and Eastern European economies went through several waves of transformation. The demise of traditional industries and the rise of the service sector during the 1990s inclined economic structure towards deindustrialization. The events over the next years paved the way for the rise of new industries in many of these countries and embarked them on the route of reindustrialization. However, in some countries the rise of new industries was more modest and took place at a much slower pace. Such development can be attributed to the process of industrial restructuring as well as industrial policies. The recent rise of awareness about the importance of industrial development for the growth and well-being of nations makes it relevant to investigate the sources behind changes in the economic structure of Central and Eastern European countries. Our findings reveal two groups of CEECs, defined as reindustrializing and those going through deindustrialization. The research identifies loss of competitiveness as the principal driving force of such an outcome. No support was found for horizontal policies. The reindustrialization mainly takes place through productivity improvements in less knowledge and technology intensive activities. Such findings are in line with those on the position of CEECs in global value chains