Export - Employment Relations in Transition Economies

Abstract

Transition economies have entered to the literature of economy with the collapse of the Eastern bloc and dissolution of the USSR's.  For many years, these countries had been managed by the centrally planned economic system. In the central planned economic system, the government was main actor in all sectors of economies. These countries had been closed to foreign market when they recently have met exportation and started trade relation with the other countries. By shifting to the market economy, the public sector has given its duty to private sectors; in the early years of independency due to insufficient production process many problems such as unemployment and inflation emerged. The aim of this study is to investigate the influence of export on employment during the transition period. The paper has analyzed the long and short term relationships between exports and employment in twenty-two transition economies by using data covering the years 1993-2011. Estimation results of the study support the relationship between exports and employment in the context of transition economies. Based on the findings, there is a long run relationship between exports and employment. It has been found that employment has the explanatory power on export in the second model. In the second model where export is dependent variable, the long-term coefficient is more powerful and error correction coefficient is negative and significant in nine countries.