International Competitiveness in Visegrad Countries: Macro and Micro Perspectives

11.11.2014 | By Vera-Karin Brazova

The book provides macro and micro perspectives on different aspects of the V4 countries’ international competitiveness and integration into global value chains (GVC). The latter is the topic especially of the first chapter by Grodzicki, where the authors describe the competitiveness of V4 economies from the GVC perspective. Their research supports the notion of an ongoing integration, as the V4’s share in European GVC income has increased from 3% in 1995 to 7% in 2011. The V4 countries the most dependent on foreign markets are the Czech Republic and Slovakia (together with Hungary above the European average); Poland, on the other hand, is less so – due to its bigger internal market. Manufacturing holds dominant position in all V4 countries, although its role varies considerably: In the Czech Republic and Hungary, the share of manufacturing has increased since 1995; while in Poland and Slovakia, the share of manufacturing is much lower and has been dropping since 1995, making the production patterns of the latter two countries more similar to Western Europe where the role of services prevails. Surprisingly due to their seeming homogenity, the V4 countries manifest a diverse set of comparative advantages: While the Czech Republic, Slovakia have maintained some of their previous advantages in resourced-based manufacturing, together with Hungary they have also developed new, strong industries in modern types of activities, such as machinery, electrical products or transportation. Contrastingly, Poland did not undergo such structural change and keeps its comparative advantage mainly in resource-based industries.

The topic of the second chapter by Daszkiewicz and Olczyk is Competitiveness of the V4Countries. Based on the 12 competitiveness pillars from the Global Competitiveness Report and using statistical analysis including 78 most competitive economies, the authors suggest that the strategy to increase competitiveness should not be significantly different for each Visegrad country: it should consist in adopting the pattern of a country which has a better position in the competitiveness ranking but at the same time is also the most similar. They recommend for Slovakia, Hungary and the Czech Republic to follow the Polish experience.

The third chapter by Bartha and Gubik focuses on how the macroeconomic development path taken by the V4 countries affects the internationalization process of their domestic companies. Conducting factor and cluster analysis, the authors come to the conclusion that the Visegrad countries have all chosen an outward focused development path. These findings do seem to correspond with the first chapter of the volume. Hence, the V4 countries rely heavily on outside resources, and the domestic firms are forced to face tough international competition even in local markets. This overreliance on outside resources can result in a dependent position of the economy. The recommendation suggested by the authors is to reach a balance, favoring both local corporations and foreign-owned or foreign-based ones.

The fourth and the last chapter of the “macro” part of the book, written by Piotr Stanek, deals with monetary policy and collective decision-making, not directly related to the V4 countries. It is based on survey of the literature and analyses the factors which influence the works of a monetary policy committee as this is considered to be an example of the most powerful committee (compared to, e.g., parliaments or supervisory boards). The factors are divided by the author into external (number of members; appointments; political influence; decision rule; structure) and internal ones (communication and learning; personal characteristics of the members). In the chapter, suggestions are also made for further research, such as exploring linkages between the number of members, their expertise or the heterogeneity of the committee.

The second part of the book dealing with the micro level of international competitiveness starts with a chapter by Krzysztof Wach, providing a diagnosis of the modeling of the firm-level international competitiveness available in the literature. The author points to the fact that the study of competitiveness has increasingly moved from the economic perspective to the one of management studies. Also, the international competitiveness of a firm does not concern only internationalized businesses, but also local firms competing with foreign entities. The chapter presents interesting insights from the literature but no direct relation to the V4 countries is made.

Chapter six, by Bartha and Gubik, represents a case study from Hungary, examining the role of business knowledge in the internationalization process. Based on a questionnaire, filled in by 104 Hungarian firms, including a large number of the internationalized ones, the authors find out that the organizational beliefs and habits are most closely associated with firms’ internationalization. This is closely followed by the competence of the employees. Contrastingly, easily transferable business knowledge elements had little effect on internationalization. Hence, while most of the government sponsored services provide knowledge on the areas easier to transfer, such support is of no real help to firms looking to go international. Also activities such as meetings for exchanging experience among entrepreneurs and government institutions are according to the study in no significant relationship with the internationalization process, and thus represent a rather unviable strategy.

In Chapter seven, Krzysztof Wach writes on the role of knowledge in the internationalization process. His study is based on a survey among Polish businesses and empirically shows dependencies between knowledge and the internationalization process. The author’s analysis provides a proof that the level of experience on international markets among top management team is positively related to the acquisition and utilization of knowledge on these markets.

The eighth chapter, by Witold Nowiński, also focuses on Poland. It investigates the impact of cross-border acquisitions on shareholder value based on a study of one particular company, namely the Asseco Group. The research results suggest that cross-border acquisitions, at least in the short run, do not create shareholder value. Another finding is that the first entry into the market has slightly better outcome for shareholders than subsequent entries. The analysis also indicates that that value creation does not depend on whether the target is in a West or East European country. The recommendation given by the author for Polish companies is to use acquisitions to enter a foreign market, but subsequently grow in this market organically.

The last chapter of the volume, by Wioletta Kilar, focuses on international corporations headquartered in the V4 countries which are ranked among 2,000 largest global corporations and compares them to other world’s largest corporations. The author observes strong polarization in the V4 countries, as the biggest number of corporations are headquartered in Poland and no corporation chose Slovakia for its headquarters. The most numerous part of the V4 is formed by corporations from the oil & gas (i.e. traditional industrial) sectors. Similarly as in Chapter Three, it is recommended for the states to both encourage foreign investment and focus more on creating conditions favorable for setting up and growing local businesses capable of transforming into global corporations.

Kiendl-Wendner, D. and Wach, K. (Eds.), International Competitiveness in Visegrad Countries: Macro and Micro Perspectives