Bartlomiej Kaminski

Integration into Global Production and Distribution Networks through FDI: The Case of Poland

Technological progress has led to increasing importance of the international division of labour organized around global production and distribution networks. Multinational corporations have been a driving force behind these developments. This article studies the role of MNCs in integrating a host country into the international system of division of labour in the context of Poland. It provides evidence of Polands increasing participation in global production and distribution networks that is taking place through FDI inflows. It concludes that, thanks to a large volume of FDI inflows, Polands exports driven by production fragmentation will continue to expand at even faster rates than those observed in recent years.

Turkey's Evolving Trade Integration into Pan-European Markets

Summary: This is an empirical paper seeking to identify the mode of Turkey’s integration into global markets in general and pan-European markets in particular as revealed in its trade performance. The analysis provides empirical support to the following observations. First, thanks to steady expansion of trade in goods and services since the mid-1980s, Turkey has become highly integrated into the world economy. Second, Turkey’s export performance in 1996-2004 in EU markets bears strong similarities to the aggregate performance of new EU members from Central Europe (EU-8). Similarities include dynamics, similar factors responsible for the increased presence in EU markets, factor content and the role of ‘producer-driven’ network trade. Turkey, together with Hungary, Czech Republic, Slovak Republic, Slovenia, Estonia and Poland, stands as one of the top performers in ‘producer-driven’ network trade indicating participation in a new global division of labor based on production fragmentation. The available evidence suggests an economic success story in the making. Export expansion owes a lot to improved policy environment and domestic liberalization. It is rather telling that the recent expansion has coincided with the implementation of most of the provisions of EU-Turkey CU Agreement, the completion of the removal of tariffs on trade in industrial products among the pan-European parties to the Pan European Agreement Cumulation of the Rules of Origin and improved macroeconomic stability after the 2001 crisis.

Entrepôt for Chinese Consumer Goods in Central Asia: The Puzzle of Re-exports through Kyrgyz Bazaars

Relying on mirror foreign trade statistics and their reconciliation with official data on balance of payments, two economists demonstrate the important role of bazaars as major conduits of trade in Central Asia, and particularly of Kyrgyz bazaars for the entry of Chinese consumer goods into the region. The authors estimate that in recent years up to three quarters of the goods imported by Kyrgyzstan have been unofficially re-exported to other Central Asian countries, generating substantial income for the Kyrgyz economy. A concluding section explores the implications of the re-export trade for Kyrgyzstan (e.g., positive spillovers for domestic light industry) as well as the potential emergence of new competitors (e.g., Kazakhstan).

Stabilization and association process in the Banlkans : integration options and their assessment

The stabilization and association process launched by the European Union in the aftermath of the Kosovo war in 1999 has created a new policy environment for five South East European countries (SEE-5). In exchange for EU assistance, the prospect of EU accession, and the continuation of preferential access to EU markets, SEE-5 governments have to upgrade their institutions and governance by European standards and engage in mutual regional cooperation, including stability pact member-countries. The authors examine the benefits to SEE-5 of trade liberalization along two dimensions and suggest conditions under which these could be maximized. They argue that the process of regional trade liberalization should be extended to multilateral liberalization, aligning SEE-5 most-favored-nation (MFN) applied tariffs on industrial products with EU MFN tariffs, and that priority be given to structural reforms and regional cooperation aimed at trade facilitation. As inter-industry trade rather than intra-industry trade dominates intra-SEE-5 trade, the potential for expansion in intra-SEE-5 trade is limited at least within the confines of the existing production structures and transportation infrastructure. Therefore SEE-5 free trade agreements are unlikely to contribute to economic growth without concurrent efforts to improve infrastructure, trade facilitation, business, and investment climate, as well as to increase competition from MFN imports to external preferential suppliers through multilateral liberalization.

Increase in protectionism and its impact on Sri Lanka's performance in global markets

Sri Lankas external performance defies global trends on two counts. First, the level of openness as measured by the ratio of trade in goods and services, after a strong increase in 1987-95 and stagnation in 1996-2004, sharply fell in 2005-10 to the levels experienced during the era of import substitution. Second, the share of clothing in manufactured exports has remained largely unchanged over the past 25 years. Had there been no economic growth, this would not have been puzzling. The paper argues that these unique features can be traced to (a) the duality of Sri Lankas economic regime -- the legacy of unfinished structural reforms of a socialist economic regime -- and (b) high and growing protectionism in the 2000s. Sri Lankas experience shows that the lack of stability in trade policy combined with recently expanding protectionism and the states micromanagement of investment does not create an institutional/policy setting conducive to rapidly evolving composition of exports and their fast growth. The practice of dealing with weaknesses in trade policies and the business environment through granting exemptions to various activities deemed desirable by the authorities only exacerbates distortions and creates more fertile ground for rent seeking. Without a radical overhaul of the current policy framework shaping interaction of Sri Lankan businesses with global markets, economic growth may be reduced, if not reversed.

The Anatomy of the Directive Capacity of the Socialist State

This article discusses the problem of the directive capacity of the socialist state, defined as the ability to identify opportunities available within both the domestic and international political economy and to develop and implement policies. The focus is not on how the directive capacity of the socialist state is actually used by the elites but on the identification of basic mechanisms shaping it. The following questions are addressed: What is the relationship between politics and economics in state socialism, and how does it determine directive capacity? What are the underlying structures that shape the socialist state/economy interaction? What mechanisms have developed within the framework of state socialism that compensate for lack of pressures toward higher efficiency? What are the systems limitations and what strategies are available to increase the directive capacity?

''Asiaregio'': An Institutional Model to Deepen Integration in Central Asia's Border Regions

Despite the high level of movement of people and goods among Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, laws governing cross-border movements neither accord preferential treatment to residents of bordering regions nor provide institutional structures that would foster cross-border cooperation. Such laws constitute barriers to deepening cross-border cooperation. Moreover, decisions concerning cross-border movements of people, goods, and services are controlled by central governments: local governments cannot act on their own to cooperate with foreign entities. Consequently, and given the various degrees of decentralization in decision-making, local trans-border initiatives face serious administrative barriers. This article argues that there is the large potential for growth that lies untapped due to the obstacles to cross-border development activities and proposes adapting the institutional concept of regional cooperation between bordering regions in neighboring countries, modeled after Euroregions, to countries in Central Asian. Their advantage would lie in establishing structures for cooperation in areas ranging from commerce to culture, environment, tourism, and education.Despite the high level of movement of people and goods among Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, laws governing cross-border movements neither accord preferential treatment to resid...

Economic Regime for Iraq: The Foreign Trade Perspective

Iraq faces structural reforms designed to effect transition from opaque administrative structures to competitive markets. The process has already begun with a series of measures announced by the Coalition Provisional Authority for Iraq. The paper provides arguments in favor of establishing liberal, preferably free trade regime based on past foreign trade performance indicating that there is not much to protect, Saddam Hussein’s legacy of negotiated free trade agreements with most Arab countries and domestic political economy considerations. It also argues in favor of radical reforms in measures shaping business climate as well as explores institutional measures to lock-in a current liberal trade regime.

Never Too Late to Get Together Again: Turning the Czech and Slovak Customs Union into a Stepping Stone to EU Integration

The Czech and Slovak Customs Union (CSCU), which came into effect in January 1993, differs from regular regional trading arrangements as its goal was to minimize the economic cost of a decline in economic ties between its members rather than to set in motion the mechanism of integration. The creation of the CSCU ensured a smooth and conflict-free break up of Czechoslovakia and resulted in divergence in regulatory regimes of the two republics. This study argues that the process of mutual adjustment triggered by the emergence of national borders is over and that integration within the CSCU, similar in depth and scope to that existing within the European Union (EU), would be a desirable policy objective. By deepening integration, both the Czech and Slovak Republics would be better prepared to handle challenges associated with the EU accession. Such a regulatory realignment would also lower border costs and behind-the-border barriers to trade and result in a more attractive investment environment in both countries.

Poland: Underpinning the Transition: The Shadow of the Round Table Agreements

The periods following major political and economic upheavals have usually witnessed an explosion of programmes and debates on how to build a new politico-economic order and how to make sure that the ideals which brought about change be carried out. The collapse of communism in Poland by contrast has triggered little intellectual excitement. There have been no stimulating assessments of factors responsible for the collapse of the communist regime in Poland. Such assessments, it would seem, would be helpful in designing a programme of transition to market-based democracy and in mobilising society to effect such a change. Instead, the transition has been so far carried out in an ideological void.