IMPACT OF THE ECONOMY'S OPENNESS ON PRODUCTIVITY.

The development of word economy in 90's years of 20^th century was facilitated by the development of international trade and its liberalization. Trade, but also foreign investment has stimulated economic growth, particularly, in developing and transition countries. Thus, trade policy began to be very effective instruments in affecting growth of economies. It is liberalization of trade that has shift Visegrad countries (Czech Republic, Hungary, Poland and Slovakia) from transition economies to the group of most developed world countries. As known, production of these countries is oriented mostly on export and their output significantly depends on demand on foreign markets. This situation yields two contrary effects. Firstly, such orientation allows achieving high rates of economic growth and strengthens the position of countries in world economy. On the other hand, countries economic performance is volatile on demand on foreign markets that counties cannot determine and on development of world, respectively European economy with its boosts and recessions. Orientation on international trade and increase in its volume creates conditions for growth of productivity that is important factor of stimulation economic growth. Thus, objective of paper is to estimate the effect of openness of economy on productivity in Visegrad countries. [ABSTRACT FROM AUTHOR]