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The increase in exports to market economies is a good sign, but it is not conclusive about the extent of restructuring of production technologies experienced in transition countries. This paper explores the source of the increase with an analysis of their exports' quality, interprets the results for the extent of restructuring, and discusses the potential factors behind them. Changes in factor intensity and unit values of both Central and Eastern European countries (CEEC) and Commonwealth of Independent States (CIS) exports in different manufacturing sectors during 1992-1999 are analysed. Although CEEC are in a significantly better position than CIS due to Europe Agreements, there is still large number of products with structural problems in CEEC. Insufficient foreign domestic investment, the Outward Processing Trade in European Agreements, and not fully exploited human capital are suggested as possible factors. Keywords: unit values, restructuring, Eastern Europe, Commonwealth of Independent States, Europe Agreements JEL Classifications: F14, F15, O19, P27, INTRODUCTION The literature before the collapse of socialism provides numerous accounts for the technological backwardness in Eastern Europe: van Brabant (1988) and Bogomolov (1987) point out that Eastern European manufactured [...]

This paper analyzes the increase in transition countries' exports to their nontraditional trade partners. It uses four different measures of product differentiation to determine the extent to which dynamics in product variety explain this phenomenon. It is found that opening up to new trade partners, at first, increases the number of sectors in which trade occurs. This is followed by a brief period of specialization in selected sectors, and finally, an increase in the number of varieties of products in these sectors. It is also found that the increase in product variety in Central and East European country (CEEC) exports has been much more substantial than it has been in the Commonwealth of Independent States (CIS), consistent with a much larger reorientation of CEEC trade with nontraditional partners. [ABSTRACT FROM AUTHOR]