Put in Perspective

The export success of the CEE countries Poland, Hungary, Slovakia and the Czech Republic is occasionally regarded as a major threat to industrialized countries like Germany.

This view has to be qualified in several respects, however. First, imports of CEE countries have also increased rapidly so that German exports to the region have risen manifold since 1995. Second, most of the literature has so far failed to analyze to which degree the rise in CEE exports has resulted from a workbench-strategy. Fact is that in the course of massive offshoring the four countries have been integrated in the production networks of companies from industrialized countries. In fact, the bulk of increases in export and production of the CEE countries is accounted for by increases in imported inputs. Nevertheless, value added of higher technology goods and R&D expenditure have risen considerably in Hungary and the Czech Republic and, to a lesser degree, in Poland and Slovakia. Despite this increase the share of the CEE in the value added of all OECD countries remains very small compared to Germany’s share.