Export structure and economic performance in transition economies

Abstract

Purpose: The current paper assesses the effects of export product structure on the economic growth in transition economies. Design/methodology/approach: The preferred estimation methods are Pedroni/Kao panel cointegration, along with FMOLS and Granger causality tests. The employed dataset corresponds to 11 transition economies over the period of 1997-2017. Findings: The results of empirical estimation showed that manufactured exports are not always the source of high economic growth as suggested by a vast literature. It appeared that the growth in transition economies has a higher response to the changes in exports of primary goods rather than manufactures. Practical Implications: Considering current trade patterns and the high demand elasticity attached to manufactured exports, the study concludes that selected transition economies should incorporate somewhat balanced trade policy fostering both exports of primary commodities and manufactures, where earnings from commodities should be facilitated to support rise of manufactures as it exhibits larger demand and potential to deploy technology/knowledge spillovers, thus, further complement economic growth. Originality/value: The paper represents valuable addition to the empirical literature concerning the exports and economic growth, especially for the selected sample corresponding to the remaining transition economies after massive transformation in 2004/2007 when several European states successfully completed the transition process.