Distributive cycles in the export-led growth model: On the macroeconomics of a pro-labor shift in Central and Eastern Europe

Abstract

This article aims to reassess a stylized fact, increasingly well-established in the Comparative Political Economy scholarship, that Central and Eastern Europe (CEE) economies exhibit characteristics of the so-called export-led growth (ELG) model. We can confirm the ‘ELG in CEE’ hypothesis by developing and testing a Goodwinian distributive cycles’ macroeconomic model focused on the productivity–employment–wage share nexus. Moreover, our approach allows us to shed light on the apparent contradiction between ELG characteristics and the dynamic wage and employment growth experienced in the region after the global financial crisis (GFC) by exploring the possibility of a productivity-induced shift within the ELG model. We conclude that CEE countries experienced technical upgrading, which allows them to maintain export competitiveness despite a visible pro-labor shift in the income distribution.