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By the end of the 1990s, Hungary entered a network of free trade agreements that virtually contained the current EU25 plus the associated countries as
well. Apart from very few products imports were fully liberalized. Concerning the impacts of liberalization on competitiveness, we may conclude, that the major changes occurred when state licensing on production inputs and equipment was lifted. This was accomplished by 1994. Since then economic agents are free to import any type of production inputs and production equipment that they consider optimal for further growth and development. This means that import barriers to become competitive were eliminated. There was a steady tendency of declining customs duties (except 1994–1996). This was required by WTO and also by the signed free trade agreements. Except for a few goods like textile, apparel, passenger cars, and agricultural
products low and declining tariff rates were applied, and quantitative restrictions were quickly eliminated. The process ended with the taking over
the EU’s acquis on customs including the CXT.
Competitiveness has become one of the key words and concepts used by economists in the last 20 years, but it has to be borne in mind that there is no one
universally accepted definition behind it. Competitiveness implies elements of productivity, efficiency and profitability. But it is not an end or target in itself. It is a powerful means of raising living standards and increasing social welfare – a tool for achieving targets. The most important and commonly accepted factors in competitiveness seem to be the ability of an industry or country to improve its income and market share, along with the ability to enhance the quality of life for its people.
This paper presents evidence on whether or not the change in market share relates to the change in the opposite direction of price level (relative unit
export value, RUEV; this paper compares the average price of a tonne of exports by Hungary to a tonne of exports from the EU). Both indicators can be used for measuring competitiveness, depending only on the definition. But what we are really interested in here is the success on foreign markets, and the simplest andmost accessible indicator of that is change in market share. This is the key indicator of these analyses. The intention with RUEV is simply to explain the change in market share.
Between 1996 and 2003 Hungary more than doubled its share in EU25 intra exports, and became one of the most important AC exporter in the
enlarged market. In 2001 Hungary earned almost one from every four euro spent in the 10 accession country by other members of the EU. From 1999 the
share of Hungarian exports to EU15 in the total exports of 10 accession countries to EU was slightly diminished, since in the previous years the country experienced quick increase. In the Hungarian manufacturing industry more than 70 product groups (out of 95 analysed) increased its market
share in the EU15 market, and more than two-thirds of them increased its relative unit export value (RUEV) simultaneously. The general trend of growth
of the RUEV value show, that not only the quantity, but the quality of the products had increased during the period of analyses. The findings show that
the RUEV of successful branches did not fall as market share grew. Hungarian firms did not necessarily need to lower prices to increase their share in the EU market. Finally, no evidence could be found on the relation between the direction of change of market share and RUEV (using the very simple methodology of the study), which means that there may not be branch-specific relations between these indicators, or Hungarian manufacturers were able to sustain their relative price level by increasing quality, although this could not be measured directly.
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