Arnoldshain Seminar XV
“The EU and Latin America Facing Globalization”
September 4 – 6, 2017

Suárez, Celestino, Universitat Jaume I. Castellón, and Bojan Shimbov and Maite Alguacil, “New European” countries exporting structure and economic growth.
Over last two decades, most of the less developed Eastern European countries have undergone far-reaching institutional and economic reforms that have resulted in significant changes in their production processes and export structure. These economies recently opened-up to the global market has enjoyed significant growth that has contributed to a convergence with high-income countries. This phenomenon has been related in current literature with the ability of transition countries to produce goods that are more sophisticated. In this paper, we seek to analyze the impact that this structural change has on the economic performance of the Western Balkan region and to determine the factors fostering this process. To do so, we elaborate an export sophistication index, à la Hausmann, focusing on the period 1996–2015. The results obtained, using panel data models, show that export sophistication has a positive and significant effect on economic growth in these economies. However, we find that it is not the sophistication in high-skill goods, but rather the increasing sophistication in medium-skill and technology-intensive manufactured goods that is driving this process. Our outcomes also reveal that the level of export sophistication is significantly influenced by the participation in international production networks and the presence of foreign firms.