Competitiveness and the External Trade of Greece in the 1990s: A Cross-Sectoral Investigation

ARGHYROU, MICHAEL G.; BAZINA, EVELYN

The Journal of Economic Integration 2003 December;18(4) :1-30.

Department of Economics and Finance Brunel University

ABSTRACT

The paper examines Greek external trade following accession to the EU, placing emphasis on the 1990s. Using original disaggregated data we find: (i) Mutually offsetting, stable trade creation/trade diversion in imports from EU and third countries respectively. (ii) No EU effect on exports. These experienced a negative structural shift in the 1990s. (iii) Competitiveness losses, more pronounced in the 1990s, especially in sectors where Greece holds a comparative advantage (i.e. trade surplus). The widening of Greek trade deficit is mainly due to stagnating exports, which we attribute to unfavourable external conditions and the strong-drachma policy. Overall, our findings indicate that real convergence has not kept at pace with nominal. JEL Classification: F02, F10, F15

Keywords: Competitiveness | trade | Greece | EU