Pay-off to Participation in Global Value Chains: How Much are New EU Member States Lagging behind the Rest of EU Countries in Terms of Domestic Value Added in Exports?

Vrh, Nataša (2015): Pay-off to Participation in Global Value Chains: How Much are New EU Member States Lagging behind the Rest of EU Countries in Terms of Domestic Value Added in Exports?

Abstract

The phenomenon of global value chains highlighted the issue of domestic value-added in exports (DVA) and led to the development of alternative trade measures in value-added terms. These, inter alia, enabled an estimation that shows that New EU countries from Central and Eastern Europe (NMS-10) experience an approximately 5 percentage points lower DVA share as compared to old EU countries (EU-15). The lag is on average the highest in knowledge-intensive manufacturing sectors (8 percentage points) and the lowest in knowledge-intensive services (0.3 percentage points). However, this paper follows the assumption that NMS-10 have acquired new knowledge by participating in Global Value Chains (GVCs), and thus gradually started increasing their DVA. Based on the empirical application of the EU trade data, I found that convergence in terms of DVA in exports can be observed in manufacturing, and especially in the services sectors. Additionally, I find that for NMS-10 countries negative relationship between participation in GVCs and DVA in exports is slightly decreasing over time in both sectors.

• Item Type: MPRA Paper
• Language: English
• Keywords: global value chains, international trade, value added in exports
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models; F - International Economics > F0 - General > F02 - International Economic Order and Integration; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade

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