Trade Openness and International Fragmentation of Production in the European Union: The New Divide?
AbstractThis paper analyses the relationship between international fragmentation of production, trade openness and global export performance in the European Union from 2000 to 2009. As most trade models featuring international production sharing show, the higher the level of fragmentation and related international openness the better the export performance of a country. Our econometric analysis confirms this hypothesis. We estimate an error correction model based on panel data on the EU Member States and find that inter-European fragmentation and openness significantly improve their long-run export performance. Policy implications could be that restrictive policies preventing firms from internationalizing production would weaken a country’s position in global production networks, with long-term negative effects on domestic jobs and growth.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 20 (2012)
Issue (Month): 3 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
Other versions of this item:
- Paolo Guerrieri & Filippo Vergara Caffarelli, 2012. "Trade openness and international fragmentation of production in the European Union: the new divide?," Temi di discussione (Economic working papers) 855, Bank of Italy, Economic Research and International Relations Area.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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