EU Accession Countries’ Specialisation Patterns in Foreign Trade and Domestic Production - What can we infer for catch-up prospects?

This paper supplements prior analysis on ‘patterns and prospects’ (Stephan, 2003) in which prospects for the speed of future productivity growth were assessed by looking at the specialisation patterns in domestic production. This analysis adds the foreign trade sphere to the results generated in the prior analysis. The refined results are broadly in line with the results from the original analysis, indicating the robustness of our methods applied in either analysis. The most prominent results pertain to Slovenia and the Slovak Republic. Those two countries appear to be best suited for swift productivity catch-up from the viewpoint of sectoral specialisation. Poland and Estonia exhibit the lowest potentials. Only for the case of Poland would results suggest bleak prospects.manufacturing industry, foreign trade specialisation, structural change, productivity growth, productivity gap, transition economies, catch-up

The Productivity Gap between East and West Europe: What Role for Sectoral Structures during Integration?

Analysis into the sources of lower levels of national productivities between Central East European Economies and the European Union is scarce and lacks comparability. These sources are assessed by analysing the role played by sectoral structures. After providing a brief overview over comparative levels of economy-wide labour productivity between the EU-15 average, selected EU cohesion countries and the EU accession countries of Estonia, Poland, the Czech and Slovak Republics, Hungary and Slovenia, a quantitative account of the sectoral content of the national productivity gap is calculated. The paper develops a method to calculate the explanatory power of patterns of sectoral structures for the size of the productivity gap by hypothetically applying average EU- 15 sectoral patterns on Central East European economies’ sectoral productivities. Subsequently, the respective roles of individual sectors in explaining the national productivity gaps are being calculated by attaching weights to sectoral productivity gaps relative to their employment shares. These results are then carefully assessed in terms of potentials and prospects for a swift and complete productivity catch-up and in terms of the most efficient policies to assist productivity convergence.Transition economies, economic development, productivity gap, EU cohesion policies, integration theory, sectoral patterns, specialisation patterns

Industrial Specialisation and Productivity Catch-Up in CEECs - Patterns and Prospects

Research into the structural patterns in Central East European economies’ aggregate value added or production can draw upon a large body of literature. However, this research often stops short of assessing what the patterns described tell us in terms of prospects for catching up of each individual accession candidate to European levels of economic development. This distinct lack is mainly rooted in shortcomings of economic theory, which so far is unable to present a coherent theory of integration between unequal partners and catch up development. This paper therefore uses various ad-hoc assumptions (path dependency, hysteresis, learning-curve, product-cycle, etc.) to predict future catch up scenarios for Estonia, Poland, the Czech and Slovak Republics, Hungary, and Slovenia. The focus is on patterns of specialisation in manufacturing industries. A variety of different taxonomies (OECD, WIFO, own classifications) establishing classes of manufacturing industries correspond to the ad-hoc assumptions used and allow careful prediction of individual paths of catching up in industrial productivity levels. The results of this analysis are particularly important for economic policy in accession candidates and at the EU level in terms of targeting structural and cohesion fund policies to their most efficient use. The analysis uses simple empirical methods working with mainly employment and industry-specific productivity data at NACE 3 digit-levels. The paper establishes an empirical model of typical industrial labour productivity growth determined by patterns of specialisation in manufacturing industries and the extent of backwardness by use of past experience both in EU cohesion and EU accession countries. This model is then applied to predict potentials of productivity growth and prospects of productivity catch-up in several distinct scenarios of structural adjustment in EU accession states. The predictions suggest that productivity catch-up will at the very least take more than two decades with Slovenia and the Slovak Republic arriving first. The Czech Republic and Hungary share similar catch-up prospects slightly more favourable as compared to Poland. The results for Estonia are bleak.

Progressivity and Flexibility in Developing an Effective Competition Regime: Using Experiences of Poland, Ukraine, and South Africa for developing countries

The paper discusses the role of the concept of special and differential treatment in the framework of regional trade agreements for the development of a competition regime. After a discussion of the main characteristics and possible shortfalls of those concepts, three case countries are assessed in terms of their experience with progressivity, flexibility, and technical and financial assistance: Poland was led to align its competition laws to match the model of the EU. The Ukraine opted voluntarily for the European model, this despite its intense integration mainly with Russia. South Africa, a developing country that emerged from a highly segregated social fabric and an economy dominated by large conglomerates with concentrated ownership. All three countries enacted (or comprehensively reformed) their competition laws in an attempt to face the challenges of economic integration and catch up development on the one hand and particular social problems on the other. Hence, their experience may be pivotal for a variety of different developing countries who are in negotiations to include competition issues in regional trade agreements. The results suggest that the design of such competition issues have to reflect country-particularities to achieve an efficient competition regime.special and differential treatment, progressivity, flexibility, competition law

The Relationship between Knowledge Intensity and Market Concentration in European Industries: An inverted U-Shape

This paper is motivated by the European Union strategy to secure competitiveness for Europe in the globalising world by focussing on technological supremacy (the Lisbon - agenda). Parallel to that, the EU Commission is trying to take a more economic approach to competition policy in general and anti-trust policy in particular. Our analysis tries to establish the relationship between increasing knowledge intensity and the resulting market concentration: if the European Union economy is gradually shifting to a pattern of sectoral specialisation that features a bias on knowledge intensive sectors, then this may well have some influence on market concentration and competition policy would have to adjust not to counterfeit the Lisbon-agenda. Following a review of the available theoretical and empirical literature on the relationship between knowledge intensity and market structure, we use a larger Eurostat database to test the shape of this relationship. Assuming a causality that runs from knowledge to concentration, we show that the relationship between knowledge intensity and market structures is in fact different for knowledge intensive industries and we establish a non-linear, inverted U-curve shape.market structure, knowledge intensity, competition policy

Firm-Specific Determinants of Productivity Gaps between East and West German Industrial Branches

Industrial productivity levels of formerly socialist economies in Central East Europe (including East Germany) are considerably lower than in the more mature Western economies. This research aims at assessing the reasons for lower productivities at the firm level: what are the firm-specific determinants of productivity gaps. To assess this, we have conducted an extensive field study and focussed on a selection of two important manufacturing industries, namely machinery manufacturers and furniture manufacturers, and on the construction industry. Using the data generated in field work, we test a set of determinant-candidates which were derived from theory and prior research in that topic. Our analysis uses the simplest version of the matched-pair approach, in which first hypothesis about relevant productivity level-determinants are tested. In a second step, positively tested hypothesis are further assessed in terms of whether they also constitute firm-specific determinants of the apparent gaps between the firms in our Eastern and such in our Western panels. Our results suggest that the quality of human capital plays an important role in all three industrial branches assessed. Amongst manufacturing firms, networking activities and the use of modern technologies for communication are important reasons for the lower levels of labour productivity in the East. The intensity of long-term strategic planning on behalf of the management turned out to be relevant only for machinery manufacturers. Product and process innovations unexpectedly exhibit an ambiguous picture, as did the extent of specialisation on a small number of products in the firms’ portfolio and the intensity of competition.productivity gap, East German industry

Spiral order in the honeycomb iridate Li2IrO3

The honeycomb iridates A2IrO3 (A=Na, Li) constitute promising candidate materials to realize the Heisenberg-Kitaev model (HKM) in nature, hosting unconventional magnetic as well as spin liquid phases. Recent experiments suggest, however, that Li2IrO3 exhibits a magnetically ordered state of incommensurate spiral type which has not been identified in the HKM. We show that these findings can be understood in the context of an extended Heisenberg-Kitaev scenario satisfying all tentative experimental evidence: (i) the maximum of the magnetic susceptibility is located inside the first Brillouin zone, (ii) the Curie-Weiss temperature is negative relating to dominant antiferromagnetic fluctuations, and (iii) significant second-neighbor spin-exchange is involved.Comment: 5 pages, 5 figures, selected as an Editors' suggestio