FOREIGN TRADE MULTIPLIER IN ROMANIA BEFORE AND AFTER ACCESSION TO THE EUROPEAN UNION

In this paper we compute the foreign trade multiplier on Romanian exports and imports data during 1990-2008. Our motivation comes from the need to determine the trade performance and trade efficiency using proper indicators The multiplier of foreign tradeforeign trade multiplier, open economy, marginal propensity of imports

Exports-Economic Growth Causality: Evidence from CEE Countries

hypothesis (GLE) for the Central and Eastern European Countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia, Slovakia) through cointegration and causality tests. The estimation is carried out within finite-order vector autoregressive (VAR) models in levels, in first-differences and error correction models. When considering bivariate systems, causality from exports to GDP is obtained for Bulgaria, the Czech Republic, Estonia, Latvia and Lithuania. Causality from GDP to exports is indicated for Bulgaria, the Czech Republic, Estonia, Hungary, Lithuania, Romania and Slovenia. We also investigate if the above results still hold when including the other relevant component of the foreign trade, i.e. imports. In trivariate systems, ELG remains valid in the Czech Republic only and becomes valid in Lithuania while GLE is validated in Hungary, Romania and Slovenia.CEE countries, exports, economic growth, imports, cointegration, Granger causality

INNOVATION VERSUS INCOME CONVERGENCE IN CENTRAL AND EASTERN EUROPE. IS THERE A CORRELATION?

The heterogeneity of response of the different economies facing the world economic crisis has brought into attention once again the issue of convergence inside the European Union. The high growth rates experienced by CEEC during the last decade created an optimistic view of rapid convergence towards Western Europe. But the crisis showed that the sources of economic growth in the region were not appropriate for a long run growth. Innovation is a key source of competitiveness and a contributor to a sustainable growth path. Even though CEEC lag behind other European countries in terms of R&D investment, a certain progress can be observed. The objective of the present paper is to establish if there is a correlation between the convergence in terms of GDP and the convergence in terms of innovation for the CEEC. Based on yearly Eurostat data for the period 1998-2008, we quantify the progress of each of the 10 CEEC both in closing the income gap and the innovation gap. We then rank the countries according to their speed of convergence and perform a Spearman rank correlation analysis. The results show that, on average, convergence in R&D is not correlated with convergence in GDP. The Czech Republic is the only country with a positive correlation between R&D intensity and GDP growth. Bulgaria, Hungary and Slovakia show a negative relationship between investment in R&D and economic growth. This implies that for most of the countries in Central and Eastern Europe, economic growth during the period 1998-2008 was mostly driven by non-innovation factors.convergence, growth, innovation, R&D

FOREIGN TRADE MULTIPLIER IN ROMANIA BEFORE AND AFTER ACCESSION TO THE EUROPEAN UNION

In this paper we compute the foreign trade multiplier on Romanian exports and imports data during 1990-2008. Our motivation comes from the need to determine the trade performance and trade efficiency using proper indicators The multiplier of foreign trad

Testing Trade-led-Growth Hypothesis for Romania

This paper tests the relationship between trade and economic growth for the case of Romania, during 1998-2004. We employed cointegration and Granger-causality tests on stochastic systems composed of exports, imports and GDP. In order to have some degree of significance, we performed our tests on quarterly data. We found that exports do not Granger-cause GDP in the Romania’s case, while the inverse relationship holds. The presence of imports in the stochastic models does not affect significantly the results. For validating our results, we performed the same tests on the 10 countries that entered EU on 1 May 2005, Bulgaria and EU with 15 members and EU with 25 members. We found that only in few cases – Czech Republic, EU 15 and Bulgaria, export-led-growth hypothesis is verified. Bi-directional causality found for exports and output in the case of Czech Republic and EU 15 is implying a virtuous circle of growth and exports, case that should be desirable for all the countries from the sample. The analyzed countries have situations which differ from case to case and a unified framework can not be applying for a generalization of the results

Cointegration and causality between trade and growth: evidence from Romania, the CEE countries and EU

A number of time-series studies exist for individual countries in the area of exports led growth but little is known about this area for Romania and some other Central Eastern European countries [CEEC]. Using quarterly data, we employ cointegration and Granger-causality tests on stochastic systems comprising exports, imports and non-exportable GDP. The findings show that only growth-led exports [GLE] hypothesis is vindicated in the case of Romania. We also test the relation between imports and growth, but failed to find any positive causality results. The inclusion of imports as a third variable within a Johansen's multivariate framework does not change the results. For comparison, same tests were applied to Bulgaria, the 10 countries recently joined the EU, the EU 15 and the EU 25. Bi-directional causality has been found for exports and non-exportable GDP only in the case of Slovenia, Czech Republic, Estonia and for the whole EU 15, implying a virtuous cycle of growth and exports

INNOVATION VERSUS INCOME CONVERGENCE IN CENTRAL AND EASTERN EUROPE. IS THERE A CORRELATION?

The heterogeneity of response of the different economies facing the world economic crisis has brought into attention once again the issue of convergence inside the European Union. The high growth rates experienced by CEEC during the last decade created an optimistic view of rapid convergence towards Western Europe. But the crisis showed that the sources of economic growth in the region were not appropriate for a long run growth. Innovation is a key source of competitiveness and a contributor to a sustainable growth path. Even though CEEC lag behind other European countries in terms of R'D investment, a certain progress can be observed. The objective of the present paper is to establish if there is a correlation between the convergence in terms of GDP and the convergence in terms of innovation for the CEEC. Based on yearly Eurostat data for the period 1998-2008, we quantify the progress of each of the 10 CEEC both in closing the income gap and the innovation gap. We then rank the countries according to their speed of convergence and perform a Spearman rank correlation analysis. The results show that, on average, convergence in R'D is not correlated with convergence in GDP. The Czech Republic is the only country with a positive correlation between R'D intensity and GDP growth. Bulgaria, Hungary and Slovakia show a negative relationship between investment in R'D and economic growth. This implies that for most of the countries in Central and Eastern Europe, economic growth during the period 1998-2008 was mostly driven by non-innovation factors