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Fragmentation, incomes and jobs: an analysis of European competitiveness

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  • Timmer, Marcel P.
  • Los, Bart
  • Stehrer, Robert
  • de Vries, Gaaitzen

Abstract

Increasing fragmentation of production across borders is changing the nature of international competition. As a result, conventional indicators of competitiveness based on gross exports become less informative and new measures are needed. In this paper we propose an ex-post accounting framework of the value added and workers that are directly and indirectly related to the production of final manufacturing goods, called "manufactures GVC income" and "manufactures GVC jobs". We outline these concepts and provide trends in European countries based on a recent multi-sector input-output model of the world economy. We find that since 1995 revealed comparative advantage of the EU 27 is shifting to activities related to the production of non-electrical machinery and transport equipment. The workers involved in manufactures GVCs are increasingly in services, rather than manufacturing industries. We also find a strong shift towards activities carried out by high-skilled workers, highlighting the uneven distributional effects of fragmentation. The results show that a GVC perspective is needed to better inform the policy debates on competitiveness. JEL Classification: F6, J2, O47, O57

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1615.

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Date of creation: Nov 2013
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Handle: RePEc:ecb:ecbwps:20131615

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Keywords: European competitiveness; fragmentation; incomes and jobs;

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Citations

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Cited by:
  1. Thomas Beissinger & Nathalie Chusseau & Joel Hellier, 2014. "Offshoring, employment, labour market reform and inequality: Modelling the German experience," Working Papers 330, ECINEQ, Society for the Study of Economic Inequality.
  2. Andrea ÉLTETŐ & Katalin VÖLGYI, 2013. "Integrated in the global value chains – trade developments between Hungary and Asia," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4, pages 57-79, June.
  3. Éltető, Andrea, 2014. "A visegrádi országok kereskedelme Ázsiával - a globális termelés lenyomata
    [The trade of the Visegrád countries with Asia - a manifestation of global production]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 586-608.
  4. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

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