Competitiveness of Selected South-Eastern European Countries in European Union Wood Flooring Market

• Selected South-Eastern European countries (SEEC - Albania, Bosnia and Herzegovina, Croatia, Montenegro, North Macedonia, Serbia and Slovenia) represent signi ﬁ cant producers and exporters of wood ﬂ ooring in Europe. In 2018, 9.4 % of Europe’s wood ﬂ ooring production originated from this region. The region is a net exporter of wood ﬂ ooring since it exports over 50 % of total production. The most important market for the export of wood ﬂ ooring is the European Union with a share of over 60 % in total exports. Trends in this market are important for manufacturers and exporters from the region. Therefore, the analysis of the impact of the European Union imports on wood ﬂ ooring production in the SEEC was conducted by application of econometric modelling. The parameters of the obtained model show that the increase of approximately 0.75 % could be expected in the production of wood ﬂ ooring in selected South-Eastern European countries for each precentral increase in the European Union imports. In addition to these results, the paper presents the analysis of the competitiveness of wood ﬂ ooring export from the region measured by the Competitiveness Growth Index (RCA1). The aim of this analysis was to quantify the level of their price and non-price competitiveness in the European Union market. Conducted analyses show that the Competitiveness Growth Index (RCA1) had positive values (higher than one) for most signi ﬁ cant countries from the SEEC for most of the observed period.

in surprisingly short supply. The forest products market long-term outlook studies are rarely published in scientifi c journals. They tend to be published regularly by consulting companies and international organizations or commissioned by governments. Otherwise, research on the forest industry market outlook takes place less systematically and typically focuses on one particular product category or region.
When it comes to the competitiveness of wood products produced in the SEEC (South-Eastern European countries, alphabetically: Albania, Bosnia and Herzegovina, Croatia, Montenegro, North Macedonia, Serbia and Slovenia), there are not many published papers. Based on the analysis of the competitiveness of the Serbian wood and furniture industry, Glavonjić et al. (2016) concluded that the value of the current wood products exported from Serbia to certain markets was symbolic compared to the overall turnover of these products at specifi c markets. In order to change that, one of the conditions is to increase the degree of fi nalisation of wood raw material available in Serbia.
Considering the above-mentioned, there is a need to use relevant scientifi c and statistical tools to obtain reliable answers to various market questions important to decision-makers. This paper presents the impact of the EU imports on the production of wood fl ooring in the SEEC. Wood fl ooring is one of the hallmark wood products by which the SEEC are recognised in Europe and beyond.
The main aim of the research is to examine the relationships and draw conclusions about the cause and effect relationships between the import of wood fl ooring in the EU countries and their production in the SEEC. In addition, the specifi c goal of the research is to analyse the price and non-price competitiveness of the wooden fl ooring that is exported from this region.

UVOD
Analysis of the market situation, trends and competitiveness are the subjects of interest to scientists and professionals dealing with wood industry. This is due to the stochastic character of the market development, whose intensity of changing is largely determined by the market positions of companies and countries on the regional and world markets. Therefore, the results of market research are a subject of interest to business sector, strategy makers and decision makers in companies and institutions. Research linkages and cause-effect relationships between different phenomena on the market are among the key elements of the market research in the fi eld of wood industry.
According to Dzian et al. (2018), modelling of the market was researched on many different scientifi c platforms. In their papers, Gravelsins et al. (2017) used the system of dynamics modelling to determine the added value for different wood products. Within their econometric market analysis, Toppinen et al. (2010) studied the following elements: 1) modelling of product demand and supply, 2) price analysis and testing of market integration, 3) market demand and price forecasting, 4) modelling industry location and 5) production technology and factor demand for wood based products.
Appropriate indices are generally used for the analysis of competitiveness in the wood processing industry. In such a way, Paluš et al. (2015) analysed the trade performance and competitiveness of the Slovak wood processing industry and compared them with the Visegrad group countries. They used a set of trade performance and competitiveness indicators for analysing the position and changes in competitiveness of the respective countries, as followed: Trade Specialisation Index, Export/Import Ratio, Standard Grubel-Lloyd Index, Revealed Comparative Advantage and Vollrath's Revealed Competitive Advantage Indices.
For analysing the competitiveness of wood and semi-fi nished wood products of Slovakia, Parobek et al. (2016) used the Revealed Comparative Advantage (RCA) index and the Comparative Price Level (CPL) index.
Most of the above-mentioned examples were confi rmed by Hetemäki et al. (2016), who stated in their work that comprehensive market analyses related to the trends in the global forest products industry came per investigates the competitiveness of only one product group as well as the complexity of indicators that measure competitiveness at higher levels of economy, it can be concluded that the choice of Index of Competitiveness Growth (RCA1) is a suffi ciently reliable and comprehensive indicator for that product group, able to fulfi l the aim of the research.

REZULTATI
The results contain the following segments: Wood fl ooring market in Europe including the SEEC; Impact of the EU imports on development of wood fl ooring production in the South-Eastern European countries: the econometric model; and Assessment of the competitiveness of exports of wood fl ooring from the SEEC. bases (EUROSTAT, FAO, and UNECE). Available scientifi c papers, studies and analyses were used as additional secondary data sources.
Analytical-synthetic methods were used for the purpose of data collection, systematization and processing. Statistica 7.0 software package was used for econometric modelling, in which correlation and regression are combined into a single methodological tool. Evaluation of parameters in econometric models was performed on the basis of the methodological guidance developed by Ranković (1996) and Jovičić (2018). Out of the general scientifi c methods, the hypothetical-deductive method was chosen and applied. Table 1 shows the name of the variables chosen for the econometric modelling, their symbols and measuring units.
The Competitiveness Growth Index (RCA1) was used to analyse the competitiveness of export of wooden fl ooring. The choice of this indicator is a result of the fact that the competitiveness of only one product group (wood fl ooring) is considered, and not the competitiveness of the industry. Therefore, the analysis based on the value of this selected index is suffi cient to assess the competitiveness of this product group. The following indexes: Revealed comparative advantage -RCA; Index of net business performance -RCA2; Index of contribution to the trade balance -CTB; Grubel-Lloyd index -GLI, Michaely index -MI are usually used to measure the competitiveness of industries and countries.
In that sense, Index of Competitiveness Growth (RCA1) is calculated as follows (Milićević et al. 2017): Where: X ij -export value of commodity group "i" within industry "i" in country "j" X j -value of total export from country "j" X i -world export of commodity group "i" X -total world export If RCA1 > 1, there is comparative advantage of industry in the worldwide market. If RCA1 < 1 a, commodity group has no competitive ability in the relevant market.
The fact is that there is not only one indicator that can comprehensively measure competitiveness. Some indicators are only applicable to the level of the overall economy. Others are applicable at the industry level, and some of them can be used to measure competitiveness at lower levels of economic structure (Bobáková and Hečková, 2007). Considering the fact that the pa- The total production of wood fl ooring in the SEEC in 2018 amounted to 8.48 million m 2 , representing 9.4 % of production in Europe. In the structure of production and consequently consumption, multilayer fl oors come in the fi rst place, followed by classic and mosaic parquet. This structure of production is very similar to the structure of production in Europe. According to the FEP report for 2018 (source: FEP, 2019), multilayer fl ooring accounted for 82 % of the total production of this association, while classic and mosaic parquet accounted for 17 % and 1 %, respectively. In Serbia in 2018, the share of multilayer fl ooring was 78 %, classic parquet 20 %, and solid fl ooring 2 % (source: University of Belgrade Faculty of Forestry, Timber Trade Centre database (internal)).
The dominant share of multilayer fl ooring in the structure of total production has greatly infl uenced its value. In 2018, the total value of wood fl ooring production in Europe was approximately € 1. Oak has been the most popular wood species in the consumption of wood fl ooring in Europe for several decades. According to the FEP report for 2018, the share of oak in the total consumption of wood fl ooring in this association was 80.3 %, while all other wood species shared the remaining 19.7 %. Ash accounted for 6.8 %, tropical species 3.7 %, beech 2.2 % and walnuts 1.3 %, while the share of other species was about or below 1 % (source: FEP, 2019).
Compared to the production, the consumption of wood fl ooring in Europe in 2018 was higher by approximately 3.4 million m 2 , which means that the missing amount was settled from imports. Europe is a major exporter but also a major importer of wood fl ooring and is, therefore, an important market for many countries. This is especially true for the European Union, which is the main market for the export of wood fl ooring from the SEEC.
Imports of wood fl ooring in the European Union have been growing over the last ten years at the average annual rate of 3.6 %. In quantitative terms, imports of wood fl ooring in the EU increased from 56. Having in mind the importance of the EU market for the export of wood fl ooring from the SEEC, the results of econometric modelling of the impact of the EU imports on the development of production of wood  fl ooring in the SEEC are presented below in order to consider the cause and effect relationships between these two economic variables.

Impact of EU imports on development of wood fl ooring production in selected South-Eastern European countries -econometric model 3.2. Utjecaj uvoza EU-a na razvoj proizvodnje drvenih podova u promatranim zemljama jugoistočne Europe -ekonometrijski model
The impact of the EU imports on production of wood fl ooring in the SEEC is best illustrated by its degree of form in the simple regression model. The basic parameters of this regression model are presented in Table 2.
The coeffi cient of determination shows that 71 % of variations in wood fl ooring production in the SEEC are explained by the model. The high correlation coeffi cient, its signifi cance at a given level of signifi cance as well as the precisely estimated parameter b (t-test) show the strong impact of the EU imports on the production of wood fl ooring in the SEEC. In this case, it can be expected that for each percentage increase of the EU imports, the production of wood fl ooring in the SEEC could increase by approximately 0.75 %.

Assessment of competitiveness of wood fl ooring export from selected South-Eastern European countries 3.3. Ocjena konkurentnosti izvoza drvenih podova iz promatranih zemalja jugoistočne Europe
The competitiveness of exporting a product from a country can be assessed in several ways. One of the more accurate ways of assessing competitiveness is to measure competitiveness by using appropriate indexes. For the purpose of this paper, the Competitiveness Growth Index (RCA1) was selected as an indicator whose values best represent the state of the competi-tiveness of the selected product in the selected time period.
Based on the formula given in the "Materials and methods" chapter, the Competitiveness Growth Index (RCA1) for the four SEEC countries was calculated and shown in Table 3  The Competitiveness Growth Index (RCA1) has positive values (higher than one) for all selected countries from SEEC region for most of the observed period. This shows the high competitiveness of wood 17

RASPRAVA
The high value of the RCA1 index for Serbia and Croatia shows that the export of wood fl ooring is a signifi cant item in the total exports of these countries. The average share of wood fl ooring exports in the total export of Serbia, in the observed period, was 0.32 %, and in the total export of Croatia 0.21 %.
The price competitiveness of wood fl ooring export from the SEEC to the EU market was analysed in this paper using the indicator of export value per square meter (€/m 2 ). The total value of exported wood fl ooring from Croatia in 2018 amounted to € 34.8 million or 17.2 €/m 2 , and from Serbia to € 27.4 million or 14.6 €/ m 2 . Slovenia had the highest export value per unit of this product amounting to 20.2 €/m 2 , despite the fact that its export of wood fl ooring was signifi cantly lower (€ 6.7 million) compared to Serbia and Croatia. Bosnia and Herzegovina had the lowest export value per unit of this product, amounting to 11.1 €/m 2 (sources: Croa- Comparative analysis of the average value of exports per unit of product from the selected countries and of the average value of imports per unit of product for the EU countries, their most signifi cant markets, clearly shows that the average value of exports of wood fl ooring from the SEEC was below the average value of imports of selected EU countries. It can be concluded that the raw material used in the production of wood fl ooring has not yet reached the level of added value that would be desirable in its export to the EU market. Therefore, the main competitive advantages of the SEEC continue to be in the area of lower operating costs for businesses. A similar conclusion was drawn by Milićević et al. (2017) in analysing the competitiveness of the Serbian wood processing industry. They state that the establishment of long-term competitiveness in the domain of wood processing industry cannot depend on the exploitation of natural resources only, but has to be increasingly based on production and implementation of technologically complex products and services with higher value added, on the basis of intensive exploitation of natural resources (various types of wood assortment).
Export prices for solid fl ooring from Serbia have increased slightly over the last few years compared to the domestic sales prices. In the higher quality classes such as select and nature, there was an increase of about 10 %, while in the lower rustic class this increase was about 5 %. This was infl uenced by several factors, the most signifi cant being the increase of prices of logs, especially in the purchase from private forests. In addition, on several occasions, there has been an increase of salaries and price of electricity. For example, in 2019, the price of electricity for industrial consumers in Serbia increased by about 25 %, which also resulted in an increase in production costs.
Considering that the current competitive advantages of producers from the SEEC cannot be the main pillars of competitiveness in the long run, innovations are needed in the production of new types of fl ooring with signifi cantly greater added value in the short term.
When it comes to non-price competitive factors, wooden fl ooring produced and exported from the SEEC meet the market requirements in terms of quality of raw materials, precision of manufacturing, ecological components of the surface treatment, humidity, packaging, delivery time and other requirements. Most manufacturers in the region have the technology and the skills of the workforce to meet almost all market requirements related to non-price elements of the com- petitiveness. The main problems in their business in the last few years have been the growth of exports of the highest quality wood raw material from the region (especially logs and elements of oak, ash, maple, walnut). Therefore, the supply of raw materials for fl ooring has been reduced year by year. The decrease in supply has led to the increase in the prices of wood raw materials and, consequently, to the increase in the cost of production. If this trend continues in the following years, it will have a severe negative impact on the profi tability of the wood fl ooring production. The manufacturer's response to this situation can be in the form of innovation and production of new types of fl ooring, combined with government measures to discourage the export of wood raw material and to build supply chains between small producers of raw material and high-value-added producers. This would contribute to strengthening the competitiveness of the wood fl ooring exporters.

ZAKLJUČAK
The research conducted and the results of the analyses in this paper have shown that the SEEC have a signifi cant role in the production of wood fl ooring in Europe and their import into the EU. In 2018, 8.48 million m 2 of wood fl ooring was produced in the SEEC, representing 9.4 % of total production in Europe. 2.6 million m 2 or 64 % of total exports of wood fl ooring from this region were exported to the EU market. The share of exports from the region in the total EU imports of wood fl ooring in 2018 was 3.3 %, indicating that this market is important for exports and, therefore, for the production of wood fl ooring in the SEEC. This is confi rmed by the results of econometric modelling, which shows that with every percentage increase in the EU imports, the production of wood fl ooring in the SEEC could be expected to increase by 0.75 %.
Concerning the competitiveness of the wood fl ooring exported from the region to the EU and other markets in the world, the conducted analyses and obtained values of the Competitiveness Growth Index (RCA1) have shown that the competitiveness of wood fl ooring in the region is satisfactory, especially in the segment of non-price elements of competitiveness. However, the analysis of price competitiveness has shown that the average values of wood fl ooring exports from the countries of the region are still lower than the average values of wood fl ooring imports of the selected EU countries. Therefore, it can be concluded that the raw material used in the production of wood fl ooring in the countries of the region has not yet reached the level of the added value that would be desirable in their export to the EU market. Therefore, the main competitive advantages of the SEEC continue to be in the area of lower export prices and lower operating costs of enterprises. For this reason, innovations are needed in the production of new types of fl ooring with signifi cantly higher added value, in the short term.