We examine industrial output in Bulgaria, Hungary, Poland, and Romania during 1989-95 in terms of pretransitional product trade orientation. The growth of EU-oriented output within sectors of industry, ex-post trade, and market liberalization, is modeled as foreign direct investment induced...

Industrial output in Central and Eastern Europe evolved in a U-Shape during the first seven years of transition. The literature explains the initial collapse of industrial output as an inefficient outcome driven by supply side distortions that constrain the transition process. We show that the...