Intra-Industry Trade Between CEFTA Countries and EU Member States

The article aims to show changes in the level and intensity of intra-industry trade between the Central European Free Trade Association (CEFTA) and the European Union. The analysis covers the period from CEFTA’s inception to the time when most of its member countries joined the EU. The structure of trade was examined using the Gruber-Lloyd indices of intra-industry trade (IIT), which are frequently used in such analyses. The IIT indices were calculated for 5,712 products according to 6-digit CN classification divided into 31 sections. The analysis showed that in 1993-2003: - The Gruber-Lloyd intra-industry trade indices for CEFTA’s trade with EU countries increased considerably. The greatest increase was noted for Poland (85%), Romania (61%), the Czech Republic (54%) and Slovakia (43%), while the slowest growth in the IIT index was reported for Bulgaria (20%). - The analyzed period marked a clear diversification in the growth of IIT indices by CN section in reference to individual countries. Countries with the lowest IIT indices (Bulgaria, Romania and Slovakia) modified the structures of their trade with EU countries to a greater extent than countries with relatively high indices. - Another important change is that most countries displayed a tendency toward concentration of trade with the highest IIT indices in an increasingly smaller number of CN sections. Notably, there was also a “shift” in the concentration of the highest IIT indices toward sections 15-20, meaning those characterized by a relatively high level of innovation and technological advancement