Patterns of intra-industry trade and foreign direct investment in agrofood products: implications for East-West integration

Abstract

implications for East-West integration Siemen van Berkum Agricultural Economics Research Institute (LEI), The Hague, The Netherlands In MOCT-MOST 9:255-271,1999, Kluwer Academic Publishers, Netherlands Abstract Agricultural relations between the EU and CEECs have changed substantially since the reforms of the economic and political system in the CEECs started around 1989/1990. Trade between the two regions has grown significantly and is increasingly of an intra-industry nature, indicating that noncomparative advantage factors, like economies of scale, product differentiation and innovations, are gaining importance as drivers of trade. Trade patterns suggest that the relationship between agriculture in East and West is increasingly complementary. The inflow of FDI from West-European firms to the food sector in the CEEC region enforces this process of complementarity. Both patterns of trade and FDI indicate that big shifts in specialisation and competitiveness among West and East European farmers due to the eastward enlargement of the Union are unlikely to occur.