The Role of Intra-Industry Trade in the Industrial Upgrading of the 10 CEECs New Members of the European Union

Abstract

In this paper, we analyse the intra-industry trade (IIT) of the ten Central and Eastern European countries (CEECs), members of the EU partly from 2004, partly from 2007, with the 15 "old" member countries of the EU. We use 10 old EU countries' analogous trade data and trends as a basis of comparison. Besides the (spectacular) growth of IIT, we also examine the trends of strong and not really favourable sectoral concentration of IIT. At the same time, the beakdown of IIT by price-quality segments (i. e., horizontal, low-quality and high-quality vertical IIT) shows a very positive picture, hinting to a very important technological and quality upgrading in the manufacturing industry of CEECs. However, such a conclusion is open to doubts because IIT does not include only the exchange of otherwise similar products of equal or different quality but also back-and-forth transactions in vertically fragmented production chains in the same commodity category. Thus, revealing the actual nature of the contribution to the production of items exported in the framework of IIT requires further research. The latter extends here to an analysis of relative wage levels of workers in industries participating in intra-industry trade, as well as to the examination of the trade of the products of research-intensive (Schumpeter") industries.