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Post-Crisis Growth and Integration in Europe

Post-Crisis Growth and Integration in Europe

Catching-up Strategies in CESEE Economies

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

Against the backdrop of the financial crisis that unfolded in 2008, this book deals with policy challenges going forward, focusing in particular on the ongoing catching-up process in Central, Eastern and South-Eastern European countries.

Chapter 22: Structural Components of International Trade Growth 1995–2009

Joseph F Francois and Julia Worz

Subjects: economics and finance, financial economics and regulation


Joseph F. Francois and Julia Wörz1 1 INTRODUCTION For many years, the global trade volume expanded considerably faster than global output. From 1995 to 2009, real annual export growth was 6 per cent on average, while global GDP and production grew only half as fast in real terms, by approximately 3 per cent per annum (WTO, 2010). Similarly, trade fell by a disproportionally large amount during the crisis that emerged in 2008. The question thus arises: what factors have been driving the overshooting of the trade response, both upward and downward, over the past decades? And are these factors going to shape world trade growth in the future? In this chapter we attempt to identify the drivers of export growth by decomposing real world export growth into its regional and sectoral components. We will put special emphasis on Central, Eastern and South-Eastern European (CESEE) economies, which owe their successful catching-up performance since the 1990s not least to their export orientation, namely impressive export growth and enormous qualitative and regional shifts in export patterns. Fidrmuc and Martin (Chapter 21 in this volume) find empirical evidence for the export-led growth hypothesis in the new EU member states. Hence, the recovery of the global trading system will continue to shape future developments in the region. Several explanations have been put forward to account for the continuously strong global trade growth prior to the recent collapse. One prominent strand of the literature focuses on the role of institutional factors, such as the dismantling...

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