How Much Restructuring did the Transition Countries Experience? Evidence from Quality of their Exports

The increase in exports to market economies is a good sign, but it is not conclusive about the extent of restructuring of production technologies experienced in transition countries. This paper explores the source of the increase with an analysis of their exports' quality, interprets the results for the extent of restructuring, and discusses the potential factors behind them. Changes in factor intensity and unit values of both Central and Eastern European countries (CEEC) and Commonwealth of Independent States (CIS) exports in different manufacturing sectors during 1992–1999 are analysed. Although CEEC are in a significantly better position than CIS due to Europe Agreements, there is still large number of products with structural problems in CEEC. Insufficient foreign domestic investment, the Outward Processing Trade in European Agreements, and not fully exploited human capital are suggested as possible factors. Comparative Economic Studies (2005) 47, 543–560. doi:10.1057/palgrave.ces.8100057