Developments and Prospects of the Electrical and Optical Equipment Sector in the Central and Eastern European Countries
wiiw Industry Study No. 2001/2, July 2001 plus free access to wiiw Industrial Database
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In Central and Eastern Europe, as in most other economies, the electrical and optical equipment sector is an important and strategic part of manufacturing, being at the core of innovation and research. It is considered a R&D- and skill-intensive industry, producing a wide range of mostly high-technology products (e.g. computers, electric motors, cables and batteries, semi-conductors, telephones, TV sets etc.). In Central Europe, the sector has revived and experienced dynamic production and export growth with good future prospects.
The study investigates the development and prospects of the electrical and optical equipment sector in the following countries: Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia.
In size, the electrical and optical equipment sector is today of relative importance in Slovenia, Slovakia, the Czech Republic and Poland where it contributes between 7% and 9% of manufacturing output. Strong specialization on the sector occurred in Hungary (24%), while in Bulgaria and Romania the sector is very small (4% and 5% respectively). The production structure is dominated by the 'electrical machinery and apparatus' industry in all countries, except in Hungary, where the sector is more diversified.
As an employer, the electrical and optical equipment sector plays a major role in Hungary, Slovenia, Slovakia and the Czech Republic (accounting for 16% of total manufacturing employment in Hungary, and for 11% in the latter three countries) and has somewhat smaller shares in Poland, Bulgaria and Romania. Until 1996 employment was reduced in all countries but rose thereafter in Hungary, the Czech Republic and in Slovakia.
On the EU market, in 1995, CEEC(7) electrical and optical equipment exports had a market share of about 3.5%, which increased to 7% in 1998 (all shares without intra-EU trade). This share was significantly lower than total manufacturing market shares (9% in 1989 and 11% in 1998). On the Austrian market, CEEC exports had a decisively larger share, accounting for 17% of Austria's non-EU imports of electrical and optical equipment in 1995, increasing to 36% in 1999. However, the CEECs are also a major export destination for Austrian electrical and optical equipment exports and absorbed about 42% of Austria's non-EU exports in 1999. Ultimately, the CEECs registered a trade deficit with Austria (again with the exception of Hungary).
Future prospects of the sector are quite good due to increasing export competitiveness (decreasing comparative disadvantage, better quality of exports) and growth potentials on domestic markets. Trends of production and exports also point in this direction. On the negative side, developments on international markets (information technology, automotive industry) are currently weakening and import competition on domestic markets is strong.