Competitiveness and Innovations in Foreign Trade: a Case of Apples from Slovakia to Czechia

. Competitiveness and innovation are critical elements for enhancing and developing successful and mutually beneficial foreign trade. This paper deals with the concept of competitiveness at the sectoral level, narrowing it down to agriculture and food production. It focuses on the apple market and compares the competitiveness in this sector from 2004 to 2020. Specifically, the research concentrates on the case of apple trading between Czechia and Slovakia just after both countries joined the EU in 2004. It becomes clear that the ability to compete in international and domestic markets depends on comparative advantages. Therefore, the business data is used to better understand comparative advantages by using business-based measures of competitiveness for the agri-food sector in Slovakia. The data used in this article originate from the Statistical Office of the European Communities (Eurostat). This research aims to identify changes in the foreign trade of apples (080810) in Slovakia and Czechia for the last sixteen years. The agricultural trade development after the accession of Slovakia and Czechia to the EU could show positive and negative trends. Both for Slovakia and Czechia, the production of apples does not cover consumption. Therefore, importing this commodity to both countries is necessary, and the benefits from foreign trade are desirable. The study findings showed that both countries do not achieve a comparative advantage in the apple trade. Therefore, more innovations might be required to enhance competitiveness and saturate both countries' markets with apples. Relevant stakeholders and policy-makers should take the required steps to improve the situation and enhance competitiveness in this market to increase the outcomes and benefits for both countries.

45 http://mmi.fem.sumdu.edu.ua/en to the specialization of the food production process. These trends are very important for a better understanding of the EU policies pursued, especially for the new EU agri-food policy ambitions that have been developed in line with the Farm to Fork and European Green Deal strategies. (Bajan et al., 2021b).
The main value-added of this paper is its specific focus on the study of the competitiveness and innovations in mutually beneficial foreign trade using a unique case of the apple trade between Slovakia and the Czech Republic.
The paper is structured as follows: Section 2 provides a concise literature review. Section 3 focuses on the materials and methods. Section 4 yields innovative and inspiring results. Finally, Section 5 comes up with overall conclusions and implications.
Literature Review. In recent years, it has become apparent that innovations that respond to problems or circumstances specific to the domestic market can effectively delay success in the international arena (Devaux et al., 2018;Kohlhepp et al., 2019). In addition to distraction and trade creation (mainly static effects), participants in free trade areas and customs unions are also looking for a dynamic benefit, such as the adaptation to the increasing competition across sectors and fields of business (Lisin and Strielkowski, 2014;Pasquali et al., 2021). While some less efficient firms in import-competing sectors may be excluded from the market, greater export opportunities could benefit successful exporting firms by increasing their productivity and international competitiveness (Jongwanich and Kohpaiboon, 2020;Nguyen, 2021). The increase in imports leads to competitive pressures, which may also lead to the decline of domestic industries and sectors and the loss of trade advantages (Strielkowski and Höschle, 2016;Curzi et al., 2021;Gupta and Helble, 2022).
By focusing the actions of the government on rules, institutions, international agreements, the allocation of capital and scientific resources, large world economies such as the United States could forge mutually beneficial cooperation with foreign partners who share American values and interests in shaping the rules for the global economy of the 21st century (Anguelov, 2021;Caria, 2022). The case of the foreign trade between China and the United States represents a very interesting case here that could be used as a point of reference. Generally, the United States must ensure that the rules governing technology, competition, and the flow of goods, services, and economic data rest on liberal, democratic, and market principles. The United States must play a greater role on the international stage to protect its global competitiveness. China's relaxation of export controls is extremely beneficial to the United States (Foot and King, 2019).
The nature of China's economic and trade policies is so distorted that it hurts many of the most innovative foreign companies (Kwan, 2020). Like American companies, Chinese companies have won more international customers through hard work, innovation, and fair competition (Liu and Atuahene-Gima, 2018). It is noteworthy that companies with relationships with international markets perform better in innovation than companies without exports or foreign capital.
The research literature shows that the losers in international trade tend to be enterprises, workers in those enterprises, and the enterprises' location places, which are directly affected by increased competition from imports (Curran and Eckhardt, 2020;Hashai and Buckley, 2021). While there is consensus that trade is generally profitable, recent literature highlights that the impact of trade, especially increased competition from developing countries, has produced winners and losers (Gereffi et al., 2021). In static terms, the law of comparative advantage states that all countries can benefit from free trade due to the increased production available to consumers due to more efficient production (Feenstra, 2018;Onileowo et al., 2021). The creation of trade benefits exporters in preferential trade bloc members who have a comparative advantage in producing products and benefits consumers in importing members who could buy products at lower prices. The second critical caveat is the so-called factor price equalization theorem which states that under free trade conditions, international trade would equalize the income of factors of production such as unskilled labor. Most economists also believe that the U.S. benefits from lower U.S. trade barriers, as consumers benefit from lower costs and manufacturers are forced to become more efficient through international competition (Li et al., 2018). If trade barriers and distortions limit market access for foreign firms, favor domestic firms and increase the overall cost of global innovation by allowing more firms than necessary, they may limit economies of scale. International trade and foreign investment boost domestic productivity by allowing a country to specialize in sectors and industry segments where country A's firms are most productive and import where its firms are least productive. These countries are working to strengthen their technological and innovative potential by influencing international economic, scientific, trade institutions, and security mechanisms. In that regard, China represents a good example of that since it constantly strengthens its economic, financial, trade, and investment cooperation with developing countries and strives for a fair and rational international economic order that benefits all countries (Wang, 2020). Following the trends of the times and making economic construction a central task, the Chinese government carried out reform. Moreover, it developed economic and technical cooperation with other countries, vigorously and rationally used foreign investment, attracted its comparative advantage, fully promoted the deepening of the division of labor in the international production chain, and provided favorable conditions for the development of foreign trade (Jiang and Yu, 2021). For 30 years in a row, China has seized the opportunity for the long-term prosperity of the world economy and the strengthening of economic globalization. Thus, the country has opened up more widely to the outside world, attracted and used foreign investment, introduced advanced technology, transformed and modernized domestic industry, and achieved the rapid development of foreign trade through full participation in the international division of labor and competition (Marquis and Qiao, 2020). Similar to the cases described above, the EU member needs to promote the opening up of their economies and continue to encourage all EU companies, including those with foreign participation, to compete fairly and innovate in the EU internal market. In turn, all European companies get a greater share of the European market and promote technological progress and social development (Schäfer, 2018). Czech and Slovak companies, including those engaged in the international trade with fruits, need to learn from that and develop these trends to become more innovative and foster mutually beneficial trade.
Methodology and research methods. The RCA index is defined as the ratio of two shares. Here, the numerator represents the country's total exports of the given commodity as a share of its total exports. The denominator is the share of world exports of the same commodity in total world exports. Range of values takes a value between 0 and +∞.

RCA = LN ((x/m)/(X/M)
(1) where xij -the value of exports of the i-th product group of the analyzed industry of country j; mij -the value of imports of the i-th product group of the analyzed industry of country j; Xj -the value of total exports from country j; Mj -the value of total imports into the country j.

RCA2 = (x-m)/(x+m)
(2) where xij -the value of exports of the i-th product group of the analyzed industry of country j; mij -the value of imports of the i-th product group of the analyzed industry of country j.
In general, the Grubel-Lloyd Index (GLI) is a well-known tool used to measure the intra-industry trade in the case of any particular product. The term was coined by Herb Grubel and Peter Lloyd in 1971 (3).
where Xi denotes the export; Mi the import of good i.
If GLi = 1, there is a satisfactory intra-industry trade level. It could be explained that a given country exports the same quantity of goods i as it effectively imports. Vice versa, if GLi = 0, there is a very low intra-industry trade volume. It would mean that the country considers only exports or imports of goods i. Results. Table 1 depicts the import and export of apples in Slovakia and the Czech Republic and the values of apples' production and consumption. The period from 2004 to 2020 was monitored, which makes up to 17 years of the monitoring axis. The import of apples in the Slovak Republic gradually grew from 2004 to 2020. The difference between the beginning and the end of the observed period is 15905 t, which means that the Slovak Republic increased the import of apples. As for export, it is similar. During the analyzed period, its export also increased. The country exported 8204 tons of apples more in 2020 than in 2004. In terms of production, the Slovak Republic reduced its production in 2020 compared to 2014 (48494 tonnes). The consumption of apples in the Slovak Republic was balanced, but there is a visible trend of reducing apples' annual per capita consumption.
Overall, it becomes apparent that the import of apples in the Czech Republic increased steadily from 2004 to 2020, with Slovakia yielding the same trend. The total difference for the period in question is 27950 tonnes. It means that the Czech Republic increased the import of apples by a larger volume than Slovakia did during the same period. Regarding export, there are significant differences. Apple export in the Czech Republic decreased over the considered period by 38723 tonnes of apples less in 2020 compared to 2004. In terms of production, the country reduced its production between 2004 and 2020. The highest production 48 Marketing and Management of Innovations, 2022, Issue 2 http://mmi.fem.sumdu.edu.ua/en was observed in 2014 (163554 tonnes). Consumption of apples in the Czech Republic was balanced, but there was a visible trend of decreasing the annual per capita apple consumption. The main importers to Slovakia are represented by the other EU member states led by Germany. This country is followed by the Czech Republic, Italy, Austria, Poland, Hungary, and France. The food imports by EU importing partners account for about 89%. The share of the importers mentioned above constitutes about 70%. Slovakia yields the largest negative trade balance in value terms of food products such as meat, fruit, vegetables, cereal preparations, and milk. The country's food self-sufficiency in value terms of all foods is 53% and 74.57% in quantity terms for basic food products. Slovak Republic is in the sixthworst place overall in the EU regarding food self-sufficiency.

Figure 2. Development of apple indicators in the Czech Republic (in tonnes)
The balance of Slovakia's foreign trade deteriorated between 2004 and 2020. Table 2 shows that in 2004 the trade balance of apples was -6 million euros, and in 2020 it was -19,92 million euros. It represents a deterioration of up to -13 million euros. On the other hand, the trade balance of apples in the Czech Republic was -9 million euros in 2004 and -45 million euros in 2020.
The results show that Slovakia achieved negative RCA values during the analyzed period. If the exhibited comparative advantages of the RCA reach a value greater than 0, it has a comparative advantage for the country in a given commodity. Conversely, if the RCA has values between 0, it achieves a comparative disadvantage. Thus, from 2004 to 2020, Slovakia achieved only a comparative disadvantage in fresh apples (080810). It reached its best value in 2006 at the level of -0.14.
On the contrary, the SR had the worst value in 2016, namely -1.11. Looking at the Czech Republic, the best year was 2004, when RCA reached -0.38. On the contrary, in 2020, the RCA had a value of -1.43, which was the worst year for the Czech Republic. Regarding RCA2, both countries indicated comparative disadvantages in fresh apples in the observed period from 2004 to 2020 (080810).  Tables 1 and 2 show that one could easily deduce that the trade between Slovakia and the Czech Republic has been steadily growing from 2004 until 2020. The beginning of the observed period (Table 3) demonstrates that imports and exports between the two countries in fresh apples were the same. It increased from year to year only up to 2012, and the Slovak Republic exported fresh apples for around 11.84 million euros. In 2012, Slovakia appeared to reach its peak in the apple trade. In 2020, the last year of the period under question, the exports from Slovakia to the Czech Republic amounted to 8.37 million euros. Nevertheless, the highest value of export of fresh apples from the Czech Republic to Slovakia was reached in 2008 at 6.69 million euros. At the same time, in 2020, the exports from the Czech Republic to Slovakia amounted to 4.72 million euros. Based on the observed values, it could be stated that Slovakia was more innovative and managed to export a larger number of fresh apples to the Czech Republic than was exported back from the Czech Republic.  Conclusions. This paper demonstrates that competitiveness as a concept is often used to assess whether a country's economy or a specific product sold at a specific market is, in fact, open to the benefits stemming from the mutual foreign trade. This paper considers the competitiveness and innovations in the foreign trade in apples between Slovakia and the Czech Republic after the EU accession in 2004 under «Eastern Enlargement». The areas, crops, the consumption or import and export of apples have changed in both countries. This paper measures competitiveness through the RCA, RCA2, and GLI indices. The data used in this research come from the Statistical Office of the European Communities (Eurostat). These data were used for the calculations and calibrations to identify changes in foreign trade in apples (080810) of Slovakia and the Czech Republic, which have occurred in the last sixteen years (2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020).
Both countries' apple production and consumption analysis showed that the production does not cover consumption. Therefore, the import of this commodity to both countries is necessary. In turn, apple consumption decreased in the Slovak Republic and the Czech Republic from 2004 to 2020. When it comes to the trade-in apples in Slovakia, in the observed period when the exports are deducted from production and the imports are added, the total consumption of apples could be accurately measured. However, the results yield that this consumption did not fully cover the consumption of apples in Slovakia for the whole given period. At the same time, the consumption of apples appears to follow a declining trend over the past few years. Furthermore, our results also reveal that this trend is the same in the case of the Czech Republic as well.
The findings of the values of the GLI index showed the intra-industry trade. In both countries, the import of one commodity represented by apples was prevalent from 2004 to 2020. It also follows logically from the consumption figures of apples for the entire population of each country subjected to our research.
Even though the index RCA and RCA2 have a high degree of certainty for the Czech Republic and Slovakia, comparative advantage has not been achieved.
Therefore, this study showed that more innovations are necessary to foster competitiveness and increase the mutual benefits from foreign trade in fruit products between the Czech Republic and Slovakia. These results are applicable in the broader context of the impacts of competitiveness and innovation on promoting and expanding the opportunities stemming from foreign trade and could be used by the relevant stakeholders and policy-makers both in the European Union Member States and in the third countries.