7

**20** percent of total exports _in 1989._ They exceed by a substantial margin the changes in exports by comparator countries such as China or Turkey. Of the CEECs, Bulgaria is the most 'dynamic'. Over the four year period, the equivalent of almost one-quarter of 1989 exports by value 'disappears', while about one-third of 1993 exports are 'new' in the sense that products are involved that were not exported in 1989. The numbers for the other CEECs are somewhat lower, but still high.

Another way of getting a sense of the changes that have taken place is to look at the performance of 'traditional' or 'established' exports since 1989. As noted earlier, commodities that were important export items in 1989 have become much less significant (see Table 5). By contrast, 8-digit product categories that accounted for less than ECU 3 million in 1989 grew extremely fast in all the CEECs. Average annual growth rates for this category were 43 percent for the Czech and Slovak Republics; 40 percent for Poland; and 55 percent in the FSU (Appendix Table 4). The share of this group of goods in total exports consequently increased sharply. For the Czech and Slovak Republics such 'non-traditional' exports accounted for 70 percent of total exports in 1993, as compared to only 30 percent in 1989. For Bulgaria, the figures are 80 and 20 percent, respectively. This illustrates the importance of decentralized production and trade decision resulting from privatization and price liberalization.

The change in specialization of the CEECs in their exports to the EU that occurred over the 1989-93 period is an additional source of information.'3 Specialization indices for broad categories of exports to the EU in 1989 and 1993 are reported in Appendix Table 5. The CEECs tend to be specialized in leather products and footwear, garments, ferrous and nonferrous metals, and furniture. Bulgaria, Hungary and Poland are also specialized in agriculture, although their relative specialization in this sector has been declining. Bulgaria in Tabl **5:** Share of 'traditional' products 1' In total exports, 1989-93 (percent)

||Share In<br>19C9|Share In<br>1993|Annual<br>Average<br>hiValue|
|---|---|---|---|
|Bulgaria<br>|44<br>|19<br>|-5.6<br>|
|CSFR|60|30|4.1|
|hungary|59|_35_|-2.1|
|<br>Poland|74|50|7.2|
|Ronania<br>|80<br>|_51_<br>|-19.4<br>|
|FSU|96|80|-0.8<br>l|

!' Greater than ECU 3 min in 1989 particular shows very large shifts towards leather/footwear; fibers; raw materials/cement; and nonferrous metals, and away from steel and annaments."4 Romania also reveals large changes: towards leather/footwear and garments, and away from mineral resources andnonferrous metals. The Czech and Slovak Republic demonstrate a sharp shift away from agriculture, wood products and arms, and towards nonferrous metals, transport equipment and machinery. Poland becomes specialized in wood products and transport equipment, and less specialized in agriculture. Hungary shows the least change of the CEECs, in part due to its longer exposure to world market prices.

The expansion of the number of new products and the absolute number of tariff lines exported to the EU suggests that much of the trade that is occurring between the EU and the CEECs is intra-industry trade, that is, the same types of goods are shipped both ways. Intraindustry trade has been expanding very rapidly between the CEECs and te EU. Intra-industry trade intensity indices for the Czech and Slovak Republics and Hungary now exceed the value of intra-industry trade for countries such as South Korea or Israel, and are approaching levels registered by the U.S. or the EFTA countries in their trade with the EU.I<sup>5</sup> Intra-industry trade is currently at about the level it was for trade between North and South Europe in the -arly