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Diagonal cumulation of origin as the EU’s institutional incentive mechanism for promoting international trade and business

  • Milan Jurse

    ()

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

  • Klavdij Logozar

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

  • Romana Korez Vide

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

Registered author(s):

    In this paper we explore the effects of a diagonal cumulation of origin as the EU’s Common Commercial Policy (CCP) incentive mechanism that affects the intra- regional trade and transaction cost structure of firms engaged in cross-border business operation. The research explores how firms should frame their cross- border physical flows of goods and the configuration of their value-adding processes for taking advantage of diagonal cumulation of origin. The empirical analysis is based on an in-depth case study of effects of the ‘SAP+ diagonal cumulation of origin’ on changes in the transaction cost structure of a selected Slovenian firm operating within the household-appliance sector in one of the Western Balkan Countries. Based on eligibility of local subsidiary for using origin of goods in its import/export transactions the cost calculations were made for its products and then three different business scenarios were developed for showing the effects of the mechanism on transaction cost changes of a firm. The paper concludes that, at the conceptual level, the mechanism of diagonal cumulation of origin may serve as an effective institutional cross-border trade-promoting tool.

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    Article provided by University of Rijeka, Faculty of Economics in its journal Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics.

    Volume (Year): 28 (2010)
    Issue (Month): 2 ()
    Pages: 221-250

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    Handle: RePEc:rfe:zbefri:v:28:y:2010:i:2:p:221-250
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    1. Matthieu Bussière & Jarko Fidrmuc & Bernd Schnatz, 2008. "EU Enlargement and Trade Integration: Lessons from a Gravity Model," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 562-576, 08.
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