Growing export performance of transition economies: EU market access versus supply capacity factors

Remarkable growth of export perfirmance of transition economies has been one of the most outstanding features of the transition and EU integration processes. The paper looks at the reasons behind this phenomenon. Following Redding and Venables (2003, 2004), and Fugazza (2004), we distinguish between foreign/EU market access and internal supply capacity factors. EU market access has been of great importance for export perfirmance but does not explain the inter country differences. Inter country differences in export perfirmance are explained by internal supply capacity factors, where stable institutional setup, structural refirms, and targeted FDI are in the forefront.