'The aim of this paper is to estimate the effect of FDI and trade openness on average sectoral wages in the manufacturing industry in the CEECs in the post-transition era. We utilize a cross-country sector-specific econometric analysis based on one-digit level panel data for manufacturing industry in the Czech Republic, Hungary, Poland, Slovakia, and Slovenia for the period of 2000-2004. The results suggest that in the short run, productivity has a weak effect on wages, unemployment a strong one, FDI a positive one that is driven mostly by the capital intensive and skilled sectors, and international trade none. In capital-intensive sectors the effect of productivity seems stronger than in labor intensive ones, and the effect of unemployment seems stronger in unskilled sectors then in skilled ones. In the medium-run, the effects of productivity remain modest and that of unemployment stronger. Interestingly, the effect of FDI turns negative. Exports have a negative effect on wages and imports a positive one. However this negative effect can also be an indicator of inverse causality, and should be interpreted cautiously. '

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