Trade integration and industrial specialization in Central Europe.

Abstract

In this paper we study the impact of trade integration on the degree ofindustrial specialization in thirteen countries of Central and Eastern Eu-rope. The results show that trade integration leads to long-run industrialspecialization in these countries. In contrast, an earlier paper by Beine& Coulombe (2004) on industrial specialization in Canada ¯nds long rundiversi¯cation as a result of trade liberalization with the U.S. Given thatthe Central and East European countries are still in an earlier stage ofdevelopment than Canada, we interpret the di®erent results that we ob-tain as evidence that the relationship between trade liberalization andindustrial specialization is not a monotonic one, but can di®er along thedevelopment path.Trade; Integration; Studies; International; International trade; Finance;