Export vulnerability of Central European countries

Abstract:

Rise in internationalization of economies is typically followed by rise in dependence on trade partners or on specific commodity markets. Substantial concentration of export to a few trade partners and/or commodity items increases vulnerability of national economy to negative extent shock. The Central Europe consists of several relatively small highly opened and mutually interconnected economies that can be easily exposed to such a risk. The paper aim to identify this possible risk induced by excessive concentration using the trade data 2000-2017. The territorial and territorial structure of export is evaluated to determine the level of concentration to subsequently discuss the possible impacts. The simple cumulative per cent shares are used to describe the concentration, in addition the more sophisticated Herfindahl-Hirschmann and Finger-Kreinin indexes are used for quantification of commodity concentration. There is no excessive concentration to specific territory, economically justifiable trade with neighboring economies prevails, the dominant role of German economy is also reasonable due to its importance in region. The commodity structure expressed in SITC, rev. 3 indicate strong level of export concentration with rising trends. The total level of commodity concentration can be interpreted as severe and connected with potential risk, because one fifth of commodity items is typically responsible for three quarters of export volume in each country. Focusing to top commodity item Czechia, Germany and Slovakia reach above 10 % of its exports in motor vehicles for the transport of persons, while Switzerland does the same in medicaments.