A GENERAL EQUILIBRIUM EVALUATION OF TRADE AND INDUSTRIAL-POLICY CHANGES IN AUSTRIA AND HUNGARY

A General Equilibrium Evaluation of Trade and Industrial Policy Change s in Austria and Hungary. - Two linked static CGE models - based on 19 90 data - are used to study effects of trade liberalization, problems of migration and changes in industrial policy in Austria and Hungary. The huge differences in factor endowment (Hungary is relatively labour abundant, Austria is relatively capital abundant) gives Hungary a str ong competitive position in the production and export of low-wage prod ucts. Austria should have comparative advantages in products with high capital content when trading with Hungary. Although trade liberalizat ion helps to improve welfare, much stronger effects follow from factor migration and capital accumulation through the transformation process in Hungary.