BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 3/2001:
Accession Countries’ Comparative Advantage in the Internal Market: A Trade and Factor Analysis
Ville Kaitila ()
Abstract: We analyse trade between Central and Eastern European
(CEE) countries and the European Union during 1993-1998 using three
methods. First, we calculate the share of intra-industry trade to determine
the extent to which two countries trade in similar products. Second, we
calculate similarity indices to determine the extent to which the structure
of the exports of two countries is similar to a third country. Third, we
calculate the revealed comparative advantage of CEE countries in the EU
internal market and analyse the results in a two-dimensional space showing
relative labour-skills and capital-intensity. We also depict how the factor
intensity of comparative advantage has changed since 1993. With this last
approach, we find that the comparative advantage of various CEE countries
have developed in quite different directions. Some countries have evolved
comparative advantage in industries requiring much skilled labour, while
others have moved in the opposite direction. This differentiation is also
reflected in degrees of capital intensity. A few CEE countries have not
shifted in this two-dimensional space.
Keywords: EU; eastern enlargement; comparative advantage; factor intensity; (follow links to similar papers)
49 pages, May 18, 2001
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