An empirical analysis of factors affecting competitiveness of CEE countries

This paper analyses the main economic factors that are influencing the competitiveness of Central and Eastern European (C.E.E.) countries. The research was carried out on a sample of ten countries (Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia and Slovakia), over the period 2004-2016. These countries were grouped by their stage of economic development, respectively: efficiency driven economies, in transition between efficiency and innovation and innovation driven economies. An econometric analysis on panel data was used, considering as a dependent variable the competitiveness of a country, quantified by the Global Competitiveness Index. As independent variables, we took into account a set of seven macroeconomic and business environment indicators which could have an impact on a country's competitiveness. The results obtained show important differences between countries, but also some resemblance. Although all the considered countries are emerging ones, the factors that have a significant influence on the competitiveness differ significantly. Thereby, if for efficiency-driven countries, G.D.P., inflation rate, trade, labour productivity and costs are important determinants of competitiveness, for innovation-driven countries the determinants of competitiveness are: G.D.P., inflation rate, tax rate, F.D.I., trade and costs. As regards the C.E.E. countries in transition only G.D.P., inflation rate and labour productivity are determinants of competitiveness.