Comments on Chapter 2 and 3

Abstract

Both Ms. Kawecka-Wyrzykowska’s and Mr. Stančík’s paper were important, interesting and useful contributions to the workshop. In the first paper the central issue is distinction between horizontal and vertical type of the IIT. The separation of the two types of trade is based on the comparison of unit values in exports and imports. Where the spread is relatively small, the products involved in trade are considered horizontally differentiated, where it is relatively large, the products are vertically differentiated. With a good portion of simplification the former is the ‘good’ while the latter is the ‘bad’ ITT, as relative prices are thought to reflect quality differences. That may be true in general, but in particular cases differences in unit value may be misleading. Especially in the case of the newMember States a poor image inherited from the communist era may lead to misinterpretations in this field. In the second paper the author is concerned about domestic firms’ “suffering” caused by emerging foreign competitors following inward FDI projects. Actually what we see described and analysed in the paper is, in a broader context, an adjustment process to increased competition. New players appear with better equipment, management, marketing, etc. and, with a minimal time lag, growth rates of sales of market incumbents go down. I think that is part of the game in an open and highly integrated economy. Moreover, as it was shown, the impact is provisional and in hardly more than one year is absorbed.