Journal Article

Emerging locations in the center of Europe: Slovakia and the Czech Republic in the European single market (original publication in German)

Die Weltwirtschaft, 2005 (4)

The article focuses on the changes in Slovak and Czech trade patterns in the course of the countries’ transition and integration into the European Union since the early nineties until EU full membership in 2004. In the aftermath of the millennium’s turn, the catching-up process towards the highly developed EU-15-countries has won momentum again, particularly in Slovakia. The continuing flows of foreign capital into both countries boosted Slovak as well as Czech export performance and thereby economic growth. The statistical analysis and a gravity model of Czech and Slovak regional trade relations reveal that both countries have seized the opportunities of free access to the EU Common Market already in the pre-accession period. Czech and Slovak trade, especially exports, is concentrated on the EU-15 countries, among them Germany as the by far dominant partner. Due to decades of economic integration in former Czechoslovakia the two successor states still retain special trade relations, even though with declining intensity. Moreover, trade with the other Visegrad partners suggests closer economic ties among the reform pioneer countries in Central and Eastern Europe. The product mix of Slovak and Czech trade flows reflects the countries’ successful integration into international value-added chains. No longer labour-intensive standardized products shape Slovak and Czech export structures but goods featuring a comparatively high technology content. The analysis reveals that Slovak and Czech locations of production are obviously capable to compete in advanced European production networks.