External Competitiveness of EU Candidate Countries

48 Pages Posted: 14 Feb 2013

See all articles by Lucia Orszaghova

Lucia Orszaghova

European Central Bank (ECB)

Li Savelin

European Central Bank (ECB)

Willem Schudel

European Central Bank (ECB)

Date Written: December 6, 2012

Abstract

As the current financial crisis has shown, macroeconomic imbalances such as persistent current account and trade deficits, can seriously undermine a country’s resilience to economic shocks. Maintaining and enhancing external competitiveness has thus become of increasing concern, particularly to European Union (EU) candidate countries whose economic growth models have been challenged in recent years. Drawing on previous studies, this paper assesses developments in the external competitiveness of EU candidate countries between 1999 and 2011. Taking a broad approach to the issue of competitiveness, the paper considers various indicators of both short and long-term competitiveness, including those related to domestic prices and costs, export performance, and institutional and structural issues. In the context of EU integration, comparisons are drawn with developments in the EU12. We find that, during the pre-crisis period, all candidate countries experienced robust export market growth, but also suffered losses in price and cost competitiveness. In terms of export characteristics, progress has been heterogeneous and also fairly slow when compared with the EU12. All candidate countries have increased their number of export products and trading partners, but only a few have been able to export more complex products. As regards structural issues such as corruption and bureaucratic efficiency, all countries have performed quite poorly with the exception of Iceland.

Keywords: EU candidate countries, external competitiveness, export growth, export specialisation, export product complexity, extensive and intensive margins, intra-industry trade, foreign direct investment, structural characteristics

JEL Classification: F1, F43, O52, P22

Suggested Citation

Orszaghova, Lucia and Savelin, Li and Schudel, Willem, External Competitiveness of EU Candidate Countries (December 6, 2012). ECB Occasional Paper No. 141, Available at SSRN: https://ssrn.com/abstract=2185897

Lucia Orszaghova (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Li Savelin

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Willem Schudel

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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