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Assessing the Full Extent of Trade Integration between the EU and Russia – A Global Value Chain Perspective

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Abstract

We analyze trade linkages between EU Member States and Russia, taking into account indirect trade links in global value chains. Our analysis is based on data for 2011 from the World Input-Output Database combined with gross trade flows between Russia and individual EU economies. We derive our conclusions from three indicators: gross exports in final use, value added in final use and value added in output. The latter two novel indicators are able to capture direct and indirect links jointly by allocating the full amount of value added from Russia in EU final domestic use and output, and inversely, the full amount of EU value added in Russia’s final domestic use and output. Russia represents the EU’s fourth-largest trade partner in terms of direct export shares, while the EU is Russia’s largest trade partner. In the same vein, Russia’s economy is considerably more dependent on European value added for both final use and output production than vice versa. However, the degree of integration varies greatly among EU Member States. For example, the Baltic states are notably more dependent on value added from Russia than vice versa, and certain economic sectors in the EU, such as the energy sector, utilities and air transport, are strongly dependent on inputs from Russia.

Suggested Citation

  • Konstantins Benkovskis & Jūlija Pastušenko & Julia Wörz, 2014. "Assessing the Full Extent of Trade Integration between the EU and Russia – A Global Value Chain Perspective," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 31-47.
  • Handle: RePEc:onb:oenbfi:y:2014:i:3:b:2
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    File URL: https://www.oenb.at/dam/jcr:b7861511-4539-4a6d-a20f-e52747b704f8/feei_2014_q3_studies_woerz.pdf
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    References listed on IDEAS

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    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    3. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    4. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
    5. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
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    1. repec:kap:openec:v:29:y:2018:i:5:d:10.1007_s11079-018-9499-7 is not listed on IDEAS
    2. João Amador & Sónia Cabral & Rossana Mastrandrea & Franco Ruzzenenti, 2018. "Who’s Who in Global Value Chains? A Weighted Network Approach," Open Economies Review, Springer, vol. 29(5), pages 1039-1059, November.

    More about this item

    Keywords

    Trade integration; global value chains; Russia; European Union;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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