Author: Arbnora Kllokoqi, Učo: 495722 Course: International Trade Brno, 2020 Essay on Visegrad 4 Visegrad 4 in the world trade, main trading partners, trade structure The main objective of this paper is to determine main trading partners of Visegrad Group and their role in the EU and worldwide trade. On this paper we will also try to give an overview of the current situation of all members of Visegrad and also elaborate the following questions: On what aspects did Visegrad 4 benefit from joining the EU? Who is their biggest partner and what factors led to that? What goods are exported and imported from Visegrad Group to Europe? What are the main goods V4 members exchange between each other and why Poland is an important trader in the EU? Why did the economy growth of Slovakia slow-down after the year of 2008? The Visegrad Group is an alliance between four central European countries; Czech Republic, Slovakia, Hungary and Poland. Each country has their representative, however, each year the annual presidency takes place. For 2020, Poland took over the presidency of Visegrad group. The idea of the alliance was to improve the mutual cooperation for economic, political and cultural interest. This idea of unification was also created to make their region more visible and powerful in Europe and worldwide. History says that these four central European countries have had a long and good relationship with each other, and not only political and economic, but cultural as well. Moreover, the agreement took place in 1991, nearly 30 years ago, in the Hungarian city of Visegrad and regardless their ups and downs, they had managed to continue their political and economic cooperation ever since the group was created. Since then, no great barriers remain in between the cooperation of the Czech-Hungarian-Polish-Slovak. However, in addition to the good relationship between these countries, one may have doubts for Visegrad’s long-term ability to remain united in any possible political ‘fight’ with the EU. For instance, Poland and Hungary stand united by ideas, however both of them are competing for EU funds, therefore at some point they might put financials ahead of their long-term relationship and solidary. Other than that, following its history I believe Visegrad group cooperation will remain strong and united. Visegrad Four (V4), play an increasingly important role in Europe, and not only in the field of politics. In fact, in the recent years the economies of the V4 countries could generally be considered successful, with their stable GDP growth and very low unemployment rates. It can be said that Poland and the Czech Republic in particular are important exporters of some goods, and not only on a European scale, which is very positively affecting their economies. Germany is undoubtedly the most important trade partner of all the V4 four countries. Between 22 per cent and 33 per cent of all exports of those countries is sold on the German market. For all the countries France is also amongst the top five of export recipients. However such a situation seems to be obvious since Germany is the largest economy in the EU and German companies are the largest investors in the V4 countries. After the EU accession of the Visegrad countries in 2004, one of the most remarkable developments was the sudden upturn in mutual trade. In 2007 the value of aggregate intraVisegrad trade was two and a half times higher than in 2003 The rate of growth in these countries’ trade with the ‘old’ EU member states was only half as much as that (The top export partners of V4 countries | Obserwator Finansowy: ekonomia, debata, Polska, świat, 2020). Main trading partners of the V4 are Germany, Italy, France, Russia, Netherlands, United Kingdom, Austria, Spain and Romania, with Germany as one of the main trading partners. The idea to Germany cooperation was triggered by the increasing attention paid by both actors to each other. “Visegrad” is a label of successful cooperation, which makes the Group to be an important actor in the neighboring regions. Germany, besides being one of the most crucial partners of each V4 country, is also the Member State often consulted when the V4 intends to push ahead its common interests within the EU. Another cooperation area worth exploring is the defense policy. The idea of placing the operational headquarters of the planned Visegrad battle group in German Potsdam seems to be a good starting point (Visegrad Group and Germany Prospects of Cooperation, 2020). Thus, we can conclude that members of Visegrad 4 besides that they cooperate with each-other in political and economic aspects, they also have a strong economic cooperation with other countries of the EU. Moreover, just recently Poland has received around €1bn from the Eu Commission to help the country protect jobs and maintain employment. Therefore, Poland continues to cooperate with EU in the aspect of political and economy. Whereas, Hungary continues to keep its good relations with EU as well as its political relations with the United States. Just recently US Ambassador David B. Cornstein said in an interview, that ‘relations between Hungary and the United States could not be better’. CZECH REPUBLIC In 2018 Czechia was the number 44 economy in the world in terms of GDP (current US$), the number 27 in total exports, the number 28 in total imports, and the number 8 most complex economy according to the Economic Complexity Index (ECI). In 2018, Czechia exported $200B and imported $180B, resulting in a positive trade balance of $20.6B. In 2018, Czechia's exports per capita were $18.8k and its imports per capita were $16.9k (Czechia (CZE) Exports, Imports, and Trade Partners, 2020). Top exports of Czechia are: Cars, Vehicle Parts, Computers, Broadcasting Equipment and others. Whereas top imports are: Vehicle Parts, Broadcasting Equipment, Office Machine Parts, Cars and Computers. Main destinations Czechia trades are Germany, Slovakia, Poland, United Kingdom, Italy and China. In 2018 Czechia exported a total of $200B, making it the number 27 exporter in the world. During the last five reported years the exports of Czechia have changed by $47B from $153B in 2013 to $200B in 2018. The most recent exports are led by Cars ($22.7B), Vehicle Parts ($15.6B), Computers ($10.8B), Broadcasting Equipment ($8.28B), and Office Machine Parts ($4.18B). The most common destination for the exports of Czechia are Germany ($63.7B), Slovakia ($14.3B), Poland ($11.9B), France ($10.2B), and ($9.2B) in United Kingdom (Czechia (CZE) Exports, Imports, and Trade Partners, 2020). In 2018 Czechia imported $180B, making it the number 28 trade destination in the world. During the last five reported years the imports of Czechia changed by $36.7B from $143B in 2013 to $180B in 2018.The most recent imports of Czechia are led by Vehicle Parts ($10.2B), Broadcasting Equipment ($8.66B), Office Machine Parts ($6.93B), Cars ($4.61B), and Computers ($4.47B). The most common import partners for Czechia are Germany ($49.2B), China ($19B), Poland ($16.1B), Slovakia ($10.6B), and Italy ($7.62B) (Czechia (CZE) Exports, Imports, and Trade Partners, 2020). (Source: Oec.world, Czech Republic, own customization) As it follows from the aforementioned factors, Czech Republic cooperates with many EU countries in the terms of economy. Main trading country is Germany. However, Czechia also trades with countries outside of the EU, such as Asian Countries, particularly China, South Korea and Japan and their main imports are electronics and machinery engineering sector. My argument is that Czechia has been cooperating with many European countries due to its cooperation with EU countries since 2004 when it became part of the European Union. Moreover, as a medium-sized, open, export-driven economy, the Czech Republic is heavily dependent on foreign demand, especially from the Eurozone. Almost 84 percent of Czech exports go to fellow EU states. Of that amount, more than 60 percent are shipped to the Eurozone and 32 percent to the Czech Republic's largest trading partner, Germany. The Czech Republic ranked number one in Central and Eastern Europe in business sophistication and efficiency enhancers and number two for macroeconomic environment and innovation in the 2016/2017 Global Competitiveness Report (Czech Republic - Market Overview | Privacy Shield, 2020). Whereas, the close cooperation with other members of Visegrad, has also strengthen further their economic sector and enabled Czechia to cooperate very closely in the economic sector; in 2018 Czech Republic has imported around $31.8B and exported around $32.1B from V4 members; Poland, Slovakia and Hungary. SLOVAKIA In 2018 Slovakia was the number 60 economy in the world in terms of GDP (current US$), the number 39 in total exports, the number 41 in total imports, and the number 16 most complex economy according to the Economic Complexity Index (ECI). In 2018, Slovakia exported $92.4B and imported $87.2B, resulting in a positive trade balance of $5.19B. In 2018, Slovakia's exports per capita were $17k and its imports per capita were $16k (Slovakia (SVK) Exports, Imports, and Trade Partners, 2020). Top exports of Slovakia are Cars, Vehicle Parts, Video Displays, Broadcasting Equipment, and Refined Petroleum. The top imports of Slovakia are Vehicle Parts, Broadcasting Equipment, Cars, Crude Petroleum, and Petroleum Gas. Main trading destinations are Germany, Czechia, Poland, France, Austria, Hungary, and Vietnam. In 2018 Slovakia exported a total of $92.4B, making it the number 39 exporter in the world. During the last five reported years the exports of Slovakia have changed by $14.5B from $77.9B in 2013 to $92.4B in 2018.The most recent exports are led by Cars ($21.6B), Vehicle Parts ($5.43B), Video Displays ($5.09B), Broadcasting Equipment ($4.26B), and Refined Petroleum ($2.03B). The most common destination for the exports of Slovakia are Germany ($20.1B), Czechia ($10.6B), Poland ($6.8B), France ($5.91B), and ($5.23B) in Austria (Slovakia (SVK) Exports, Imports, and Trade Partners, 2020). In 2018 Slovakia imported $87.2B, making it the number 41 trade destination in the world. During the last five reported years the imports of Slovakia changed by $8.8B from $78.4B in 2013 to $87.2B in 2018.The most recent imports of Slovakia are led by Vehicle Parts ($8.58B), Broadcasting Equipment ($5.06B), Cars ($3.32B), Crude Petroleum ($2.68B), and Petroleum Gas ($1.65B). The most common import partners for Slovakia are Germany ($15.8B), Czechia ($14.3B), Poland ($6.49B), Hungary ($5.76B), and ($5.4B) in Vietnam (Slovakia (SVK) Exports, Imports, and Trade Partners, 2020). (Source: Oec.world, Czech Republic, own customization) Between 2000 and 2008 the Slovak economy grew by more than 60% in real terms. This considerable expansion meant an average yearly per capita growth rate of almost 6%, one of the highest in the European Union. However, after 2008 Slovak growth slowed down afterwards. The first noteworthy point is that increases in labour productivity were the main driver of growth in all four countries. Besides labour productivity, two other factors had a significant impact on growth in Slovakia. First, increases in the employment rate contributed, on average, around 1.4 percentage points each year to GDP per capita growth, paralleling a substantial decline in Slovakia's unemployment rate over this period, from almost 19% in 2000 to less than 10% in 2008. Second, changes in the age structure of the population contributed, on average, around 0.6 percentage points each year to GDP per capita growth (2020). Similar to Czechia, Slovakia also cooperates with several countries of the EU, and biggest destination for trades is Germany. However, as we can follow from the information above, other main partners are members of Visegrad Group. In 2018 Slovakia has exported around $22.5B and imported $26B from V4 members; Poland, Slovakia and Hungary. Main trading goods exchanged between these countries are from the electronics and machinery engineering sector. HUNGARY In 2018 Hungary was the number 55 economy in the world in terms of GDP (current US$), the number 35 in total exports, the number 34 in total imports, and the number 14 most complex economy according to the Economic Complexity Index (ECI). In 2018, Hungary exported $122B and imported $113B, resulting in a positive trade balance of $8.04B. In 2018, Hungary's exports per capita were $12.4k and its imports per capita were $11.6k (Hungary (HUN) Exports, Imports, and Trade Partners, 2020). The top exports of Hungary are Cars, Vehicle Parts, Spark-Ignition Engines, Packaged Medicaments, and Video Displays. The top imports of Hungary are Vehicle Parts, Cars, Packaged Medicaments, Integrated Circuits, and Crude Petroleum. Hungary trades mostly to Germany, Italy, Romania, Slovakia, and China. In 2018 Hungary exported a total of $122B, making it the number 35 exporter in the world. During the last five reported years the exports of Hungary have changed by $20.3B from $101B in 2013 to $122B in 2018. The most recent exports are led by Cars ($11B), Vehicle Parts ($7.22B), Spark-Ignition Engines ($3.92B), Packaged Medicaments ($3.76B), and Video Displays ($2.74B). The most common destination for the exports of Hungary are Germany ($32.6B), Italy ($6.29B), Romania ($6.18B), Slovakia ($5.76B), and Austria ($5.42B) (Hungary (HUN) Exports, Imports, and Trade Partners, 2020). In 2018 Hungary imported $113B, making it the number 34 trade destination in the world. During the last five reported years the imports of Hungary changed by $17B from $96.5B in 2013 to $113B in 2018.The most recent imports of Hungary are led by Vehicle Parts ($5.84B), Cars ($4.59B), Packaged Medicaments ($3.21B), Integrated Circuits ($3.14B), and Crude Petroleum ($2.97B). The most common import partners for Hungary are Germany ($29.6B), Poland ($6.8B), China ($6.67B), Austria ($6.24B), and ($5.98B) in Czechia (Hungary (HUN) Exports, Imports, and Trade Partners, 2020). (Source: Oec.world, Czech Republic, own customization) Hungary has become a market economy, transitioned from centrally economy and World Bank has considered Hungary as a country that has a high-income economy. The country's biggest trading partners include Germany and Austria. Moreover, Hungary plays a significant role in the EU trades in the industry of mining, metallurgy and construction. My argument is that, since Hungary has become member of the EU, the country has seen a significant economy growth, and that is mainly because being member of the EU has opened many doors to the countries of the EU, including its bigger partners; Germany and Austria. However, noteworthy point is that Hungary is also very developed in the cultural and natural aspect. The country is home to the biggest lake in Central Europe and an expansive thermal cave system. Much of Hungary's cultural identity is tied to Budapest, which served as the second capital of the Austro-Hungarian Empire during its reign from 1867 to 1918. The city is bisected by the Danube River and was once called the “Queen of the Danube” for its architectural grandeur (2020). Besides the good relationship with the EU Countries, Hungary cooperates also with US, their cooperation is mainly in politics and just recently US Ambassador David B. Cornstein said in an interview, that ‘relations between Hungary and the United States could not be better’ (Kft., 2020). POLAND In 2018 Poland was the number 21 economy in the world in terms of GDP (current US$), the number 23 in total exports, the number 18 in total imports, and the number 22 most complex economy according to the Economic Complexity Index (ECI). In 2018, Poland exported $259B and imported $278B, resulting in a negative trade balance of -$18.6B. In 2018. The top exports of Poland are Vehicle Parts, Cars, Seats, Other Furniture, and Video Displays. The top imports of Poland are Crude Petroleum, Cars, Vehicle Parts, Broadcasting Equipment, and Packaged Medicaments. Poland exports mostly to Germany, Czechia, United Kingdom, France, and Italy. In 2018 Poland exported a total of $259B, making it the number 23 exporter in the world. During the last five reported years the exports of Poland have changed by $63.4B from $196B in 2013 to $259B in 2018. The most recent exports are led by Vehicle Parts ($14.7B), Cars ($7.25B), Seats ($6.24B), Other Furniture ($5.33B), and Video Displays ($4.77B). The most common destination for the exports of Poland are Germany ($70.7B), Czechia ($16.1B), United Kingdom ($15.9B), France ($14.3B), and ($11.8B) for Italy (Poland (POL) Exports, Imports, and Trade Partners, 2020). In 2018 Poland imported $278B. During the last five reported years the imports of Poland changed by $82B from $196B in 2013 to $278B in 2018.The most recent imports of Poland are led by Cars ($10.7B), Vehicle Parts ($9.18B), Broadcasting Equipment ($5.4B), and Office machine parts ($4.68B). The most common import partners for Poland are Germany ($70.9B), Italy ($15.8B), Russia ($15.4B), Netherlands ($13.2B), Czechia ($11.9B) and France ($11.5B) (Poland (POL) Exports, Imports, and Trade Partners, 2020) (Source: Oec.world, Czech Republic, own customization) I believe that one of the reasons why Poland is such an important trader in the EU is because of the skilled labor force. The majority of Poland’s population are multilingual; they are fluent in several languages, and that puts Poland to an advantage compared to other central EU countries. This is mainly because of their cooperation with international companies, also there are many outsourcing services in the field of IT Services and Consulting, thus their motivation and hard work to learn and speak different languages. Another reason is the investment of many international companies in Poland; low labor costs, and large labor force as well as and their position in the center of EU has attracted many international investors, therefore the role of the local investors in Poland is not that significant. International companies that have had an important impact on the export of Poland as well as economic development are Procter & Gamble, Accenture, Citi, PwC, Samsung Electronics and others. Regarding the relationship with other EU members, similar to Hungary and Slovakia, Poland as well has benefited since it became member of EU in 2004. Moreover, just recently Poland has received around €1bn from the Eu Commission to help the country protect jobs and maintain employment. Moreover, The European Commission (EC) has announced that it has paid Poland 1 billion euros to help the country protect jobs and maintain employment. EC President Ursula von der Leyen said on Twitter that "it's just the start," adding that Poland will receive a total of 11.2 billion euros from SURE including for financing mechanisms of reduced working time. Therefore, Poland continues to cooperate with EU in the aspect of political and economy. Conclusion Visegrad group countries are located in the Central Europe and have relatively low labor costs (average salary per month is lower that other countries of the EU, such as Germany, France or Austria). Therefore, they particularly attract the attention of many investors for these sectors. Thus, location of V4 and low labor costs are main reasons for trades. Main goods that Visegrad members trade are similar for each of the country members, however, Poland has more diversified exports, i.a that is mainly because of a well-established and sizable foodstuff as well as agricultural sector and metallurgical industrial sector. Another factor that Poland plays such a significant role as a trader in the EU is because of the skilled labor force. The majority of Poland’s population are multilingual; they are fluent in several languages, and that puts Poland to an advantage compared to other central EU countries. Therefore, many companies in the field of IT Services and Consulting outsource their services in foreign markets. Moreover, it is also important to indicate that a large part of manufactured machinery and vehicle industry that are exported from V4 countries, are not produced by local investors. Main products are produced by foreign companies. The role of local investors is not significant, especially the case of Hungary and Slovakia. Therefore, we can conclude that Visegrad members have very suitable conditions for international investors and trades. Following from the research, it is not surprising that Germany is the biggest trading partner for all members of Visegrad Group and that these countries are highly depended on German economy, however this dependency is mutual, considering the outstanding role of the Visegrad group in German market. Moreover, it can be said that around 20 – 34% of all exports of V4 countries are sold in German market. The main reason for this strong cooperation is their mutual beneficiaries, Poland, Czechia, Slovakia and Hungary sell their exports to Germany, however most of these exports are produced by German companies in these countries, especially Poland and Hungary. Another reason is the skilled and large labor force, especially in Poland. However, mutual future cooperation between Slovakia and Germany should concentrate on finding solution to the problem of unscheduled electricity flows from Germany. According to an article on Visegrad Group and Germany Prospects of Cooperation, Slovak point of view is that isolated measures within such a small state are not sufficient for managing unexpected electricity flow and Slovakia therefore calls for cooperation in this area (Visegrad Group and Germany Prospects of Cooperation, 2020). Moreover, Visegrad countries emphasize the need to develop an effective energy infrastructure and welcome the European Commission’s draft regulation for transEuropean energy infrastructure, which seeks to identify the main obstacles to the establishment of internal market. Thus, their inevitable cooperation. Therefore, my argument is that the economy growth of Visegrad Member’s has seen a significant growth since their partnership with the EU. Therefore, we can conclude that all these countries can be considered as very strong partners of the EU especially in the economic sector as they have very stable GDP growth and low unemployment rate. However, the countries have had some ups and downs during the way. For instance, between 2000 and 2008, Slovakia had one of the highest GDP per capita growth rates in Europe, driven mainly by increases in labour productivity. Since the crisis, however, growth rates in Slovakia have slowed down considerably, due to lower productivity growth and an increase in the unemployment rate. However, there are substantial gains to growth to be achieved by closing the still large labour productivity gap between Slovakia and more developed European economies. A possible way forward for Slovakia to increase growth and productivity is to raise investment in equipment, given the substantial impact on growth that this type of investment seems to have. Of course, fostering substantial additional investment, both foreign and home-grown, in a broader set of industries will in large part depend on further reforms such as increasing human capital by improving the education system, enhancing the transport infrastructure of relatively underdeveloped regions such as Eastern Slovakia, and promoting a better business environment (2020). In conclusion, we can say that The Visegrad Group continues to contribute towards the development of the Central European economy based on effective, functionally and mutual cooperation and coordination with the existing European countries and transatlantic institutions. In order to promote and preserve cultural cohesion, Visegrad Group will continue to enhance their cooperation in the field of culture, politic, education, economic and exchange of information. All the aforementioned activities of Visegrad Group are aimed at strengthening stability in the Central European region. References: 1. 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