East-West Trade in 1991-92: Unexpectedly Favourable Development

East-West trade declined in 1991 and in the first quarter of 1992. Trade between the West and the three reform countries in East-Central Europe (Hungary, the CSFR and Poland), however, expanded much faster than expected: The volume of OECD exports increased by 37 percent, imports expanded by 18 percent. The composition of goods in East-West trade shifted to higher unit values. The countries of East-Central Europe tend to attract a lot of Western investment because of their large supply of highly skilled but cheap labour. At the present, wages in these countries are no higher than 7 to 10 percent of wages in Austria.