EUROPEAN INTEGRATION AND THE IBERIAN ECONOMIES

Transcription

1 EUROPEAN INTEGRATION AND THE IBERIAN ECONOMIES

2 EUROPEAN INTEGRATION AND THE IBERIAN ECONOMIES Edited by George N. Yannopoulos Chairman, The Graduate School of European and International Studies, University of Reading Palgrave Macmillan

3 ISBN ISBN (ebook) DOI / The Graduate School of European and International Studies, 1989 Softcover reprint of the hardcover ist edition All rights reserved. For information, write: Scholarly and Reference Division, St. Martin's Press, Inc., 175 Fifth Avenue, New York, NY First published in the United States of America in 1989 ISBN Library of Congress Cataloging-in-Publication Data European integration and the Iberian economies / edited by George N. Yannopoulos. p. cm. "Most of the papers... were first presented at a conference organised by the Graduate School of European and International Studies of the University of Reading in July 1986"-Pref. Includes bibliographies and index. ISBN $50.00 (est.) 1. Spain-Economic policy--congresses. 2. Spain-Foreign economic relations--congresses. 3. Portugal-Economic policy--congresses. 4. Portugal-Foreign economic relations--congresses. 5. Europe -Economic integration--congresses. I. Yannopoulos, George N., II. University of Reading. Graduate School of European and International Studies. HC385.E dcI CIP

4 Contents List o/tables and Figures Preface Notes on the Contributors viii xi xiii 1 INTRODUCTION George N. Yannopoulos 1 1. Trade policy choices in the Iberian Peninsula 1 2. The role of external trade in the design of development strategies 2 3. Ideal versus realistic options in the design of development strategies 5 4. The range of available options 7 5. Integration among unequals or self-reliance Plan of the book Bibliography THE BALANCE OF PAYMENTS CONSTRAINT AND GROWrn IN PORTUGAL: A.l. Marques Mendes and A.P. Thirlwall 1. Introduction Portuguese growth performance: Specialisation effects on growth Integration into the EEC Policy suggestions 33 Notes and Tables 36 Bibliography 39 Appendix SPAIN'S TRADE AND DEVELOPMENT STRATEGIES 40 Juana Castillo Gimenez, Ernest Reig Martinez and Manuel Sanchis i Marco 1. Introduction 2. Import Substitution and Economic Development 3. Industrial growth and the promotion of exports 4. Growth and Employment 5. Prospects from European Integration Tables Bibliography

5 vi 4. THE EFFECTS OF TARIFF PREFERENCES ON EXPORT EXPANSION, EXPORT DIVERSIFICATION AND INVESTMENT DIVERSION: A COMPARATIVE ANALYSIS OF THE llerian AND OTHER MEDITERRANEAN ECONOMffiS 66 George N. Yannopoulos 1. Introduction Benefits of tariff preferences Export Expansion effects Export diversification effects Foreign direct investment and tariff preferences Concluding remarks 80 Tables 82 Bibliography THE PORTUGUESE EXPERffiNCE OF EUROPEAN INTEGRATION - A QUANTITATIVE ASSESSMENT OF THE EFFECTS OF EFT A AND EEC TARIFF PREFERENCES 87 Armindo da Silva 1. Introduction Methodological aspects Selection of the regression equations Evolution of the export distribution pattern Evolution of the import distribution pattern Conclusions 123 Notes and Tables 127 Bibliography SPANISH EXTERNAL TRADE AND EEC PREFERENCES 144 Ismael Fernandez Guerrero, Agustin Gonzalez and Celestino Suarez Burguet 1. Introduction The preferential trade agreement between Spain and the EEC Spanish external trade Conclusions 158 Tables 160

6 vii 7. PORTUGAL'S ACCESSION TO THE EEC AND ITS IMPACT ON FOREIGN DIRECT INVESTMENT 169 Elisa M. Ferreira Taveira 1. Introduction Choice of a methodology Empirical results Conclusions 189 Notes 191 Annex I 192 Annexll 196 Tables 202 Bibliography DIRECT FOREIGN INVESTMENT AND INTERNATIONAL TRADE IN SPAIN 227 Francisco Caballero Sanzo Angel Orti La/uJZ and Vicente Orts Rios 1. Introduction International trade and foreign investment The Spanish case Foreign investment in Spain Geographical distribution of investment Conclusions and summary 237 Notes and tables 239 Bibliography THE IBERIAN COUNTRIES IN THE EEC - RISKS AND CHANGES FOR THEIR MANUFACTURING INDUSTRIES 254 Juergen B. Donges and Klaus-Werner Schatz 1. Introduction 2. Trade patterns and determinants 3. Comparative advantages and specialisation 4. Facing increased import competition 5. Employment effects 6. Adjustment requirements 7. Conclusions and policy implications Notes and tables Bibliography Index

7 List of Tables and Figures TABLES 1.1 Characteristics of alternative trade and development strategies Sources of growth in the Portuguese economy Annual breakdown of sources of growth Macroeconomic performance of the Spanish economy The Spanish external sector: some basic features Relative importance and structure of imports Structure of Spanish exports and imports Share of sectors in the total gross industrial product Fast growing exports and imports Indexes of standardised export performance Export structure similarity Inter-temporal comparisons of export structures: Southern Europe Inter-temporal comparisons of export structures: Mahgreb and Mashrek countries Results of the likelihood test for homoskedasticity Export model : fmal regression results for the period Export expansion effects relative to Export model: disaggregated results Export expansion effects by commodity groups Import model: final regression results for the period Import effects in value and percentage Import model: fmal regression results dis aggregated by industrial sectors Gross trade creating effects by commodity groups Spanish imports, Timetable of tariff reductions Spanish trade with the EEC Trade between Spain and the EEC Indices of Spanish and EEC trade a Exports of Spain and the other NICs b Annual rates of growth Spanish exports to the EEC as a proportion of total Spanish exports Spanish imports from the EEC as a proportion of total Spanish imports 167

8 6.9 Brussels tariff nomenclature Structure of the FDI stocks according to the country of origin Relative weight of FDI within each Portuguese sector of activity Results of the regression analysis Results of the econometric work for all manufacturing industries Results of the econometric work for domestic market oriented manufacturing industries Results of the econometric work for the export oriented manufacturing industries Spanish long-run investments abroad by sector Spanish exports ( ) Spanish imports ( ) Revealed comparative advantage index Intra-industry trade index Direct foreign investment in Spain ( ) Trends in exports and imports Spanish long-run investments abroad by country of destination Geographical origin of direct foreign investment in Spain Trade matrix between the Iberian countries and the EEC Bilateral trade between Portugal and Spain Sources of increase of manufactured exports Spearman rank coefficients for RCA indexes Commodity groups revealing competitiveness in trade with EEC Portugal's RCA indexes in trade with Spain Trade overlap coefficients for Portugal and Spain Tariff-cutting commitments by the Iberian countries Employment changes in Portugal and Spain from EEC entry Investment ratios in Portugal and Spain Comparative trends of macroeconomic distortions Index of effective real exchange rates 289 A-9.1 Foreign trade indicators for Portugal 291 A-9.2 Foreign trade indicators for Spain 293 A-9.3 Revealed Comparative Advantages and Disadvantages in Portugal's foreign trade 295 A-9.4 Revealed Comparative Advantages and Disadvantages in Spain's foreign trade 298 A-9.5 Revealed Comparative Advantages and Disadvantages of Portugal in trade with Spain 301 ix

9 x A-9.6 Government guided industrial restructuring in Spain 303 FIGURES 1.1 National preferences for industrial production Excess cost of industry at different levels of industrial production Movements over time of the excess cost of industry curve Choice of partners in preferential trading Trade-offs between price movements and income growth Quarterly pattern of relative share index: high demand Quarterly pattern of relative share index: intermediate demand elasticity Quarterly pattern of relative share index: low demand elasticity Frequency distribution of the log of exports by partners Preference coefficients in the export model: Preference coefficients in the import model: The measurement of the welfare effects of tariff preferences 120

10 PREFACE Most of the papers appearing in this volume were first presented at a conference organised by the Graduate School of European and International Studies of the University of Reading in July The idea of a conference to examine the trade and development strategies of the two Iberian countries during the period of their progressive integration in the European economy was ftrst explored in the course of a visit to the University of Valencia, Spain. The experience of the two Iberian economies was rightly thought as presenting interesting insights into the links between trade and economic growth. In addition, it is a key issue to consider in assessing the potential impact of the Iberian enlargement of the European Community. The idea for such a conference was warmly endorsed by the British Institute in Spain and the British Council in London provided financial support to enable a group of colleagues from the University of Valencia to participate in the conference. Without the financial support of the British Council this conference would not have taken place. Professor Aurelio Martinez Estevez, then the Dean of the Faculty of Economics and Business Administration of the University of Valencia, supported this project with enthusiasm and helped in the recruitment of the Spanish contributors to the conference. I am very grateful for his assistance. I am also thankful to Professor Antonio Simoes Lopes, the present Rector of the Technical University of Lisbon, for his encouragement. The Universities Association of Contemporary European Studies (UACES) made a valuable financial contribution to cover the UK costs of the organisation of the Reading conference. The support of the Executive Committee of the UACES and its Secretary Mrs. Eva Evans is gratefully acknowledged. Two of the chapters in this book (chapter four and chapter nine) appeared in a slightly different form in the Journal of Common Market Studies and in Weltwirtschaftliches Archiv. I am very grateful to the editors of these two journals for their kind permission to reprint these articles in the present volume.

11 xii My thanks are also due to Mrs. P. Elgar and Mrs. N. Hamilton who typed so professionally what in effect proved to be a demanding manuscript. G.N. Yannopoulos Reading, April 1988

12 NOTES ON THE CONTRIBUTORS Francisco Caballero Sanz is Lecturer in the Department of Economics of the University of Valencia, Spain. Juana Castillo Gimenez is Lecturer in the Department of Applied Economics of the University of Valencia, Spain. Juergen B. Donges is Professor at the Kiel University (Institute of World Economics), Kiel, West Germany. Ismael Fernandez Guerrero is Lecturer in the Department of Applied Economics, University of Valencia, Spain. Agustin Gonzalez is Lecturer in the Department of Applied Economics of the University of Valencia, Spain. A.J. Marques Mendes is Professor at the University of Coimbra, Portugal. Angel Orti Lahoz is Professor in the Department of Economics of the University of Valencia, Spain. Vicente Orts Rios is Lecturer in the Department of Applied Economics of the University of Valencia, Spain. Ernest Reig Martinez is Professor of Applied Economics of the University of Valencia, Spain. Manuel Sanchis i Marco is with the Commission of the European Community, Brussels. Klaus-Werner Schatz is Research Fellow in the Institute of World Economics, Kiel University, Kiel, West Germany. Armindo da Silva is with the Commission of the European Community, Brussels. Celestino Suarez Burguet is Lecturer in the Department of Applied Economics of the University of Valencia, Spain. Elisa M. Ferreira Taveira is Research Economist in the Commission for the Northern Region of Portugal, Porto and teaches in the Faculty of Economics of the University of Porto, Portugal. A.P. Thirlwall is Professor of Applied Economics, University of Kent, England. George N. Yannopoulos is the Chairman of the Graduate School of European and International Studies, University of Reading, England.