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Fragmentation and parts and components trade in the Western Balkan countries

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  • Bojan Shimbov
  • Maite Alguacil
  • Celestino Su�rez

Abstract

As a consequence of the increasing globalisation and integration of the world's markets, there has been an intensive process of international fragmentation of production over the last few decades. This phenomenon whereby previously integrated productive activities are segmented and internationally spread is reflected in the rapid increase in parts and components trade, growing at higher rates than final goods trade. In this process the Western Balkan countries (WBC) have been no exception. With their recent integration into global markets, the WBC have witnessed growth in parts and components trade that has even exceeded the world average. This article examines the determinants of the trade that stems from the international fragmentation of production in the WBC. Using a panel data set of disaggregated bilateral trade flows, we estimate gravity equations for 2000--2009. Our findings support the hypothesis drawn from the theory of fragmentation that trade in parts and components is motivated by labour cost differences and by geographical and proximity reasons. The relevance of additional service link costs, as well as the influence of institutional similarity and infrastructure quality or political--economic agreements is also confirmed by our empirical research.

Suggested Citation

  • Bojan Shimbov & Maite Alguacil & Celestino Su�rez, 2013. "Fragmentation and parts and components trade in the Western Balkan countries," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 371-391, September.
  • Handle: RePEc:taf:pocoec:v:25:y:2013:i:3:p:371-391
    DOI: 10.1080/14631377.2013.813142
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    References listed on IDEAS

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    1. Francois, Joseph & Manchin, Miriam, 2013. "Institutions, Infrastructure, and Trade," World Development, Elsevier, vol. 46(C), pages 165-175.
    2. Stephen Golub & Ronald Jones & Henryk Kierzkowski, 2007. "Globalization and Country‐Specific Service Links," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(2), pages 63-88.
    3. Stephen S. Golub & Ronald W. Jones & Henryk Kierzkowski, 2007. "Globalization and Country-Specific Service Links," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 10(2), pages 63-88.
    4. Deardorff, A.V., 1998. "Fragmentation Across Cones," Working Papers 427, Research Seminar in International Economics, University of Michigan.
    5. Hartmut Egger & Josef Falkinger, 2003. "The Role of Public Infrastructure for Firm Location and International Outsourcing," CESifo Working Paper Series 970, CESifo.
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    Cited by:

    1. Krasniqi, Besnik & Ahmetbasić, Jasmina & Bartlett, Will, 2019. "Barriers to cross-border trade in intermediate goods within regional value chains in the CEFTA region," LSE Research Online Documents on Economics 117484, London School of Economics and Political Science, LSE Library.
    2. Sanjeev Vasudevan & M. Suresh Babu, 2021. "Global production sharing and trade effects: an analysis of Eurasian Economic Union," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 633-665, December.
    3. Krasniqi, Besnik & Ahmetbasić, Jasmina & Bartlett, Will, 2022. "Foreign direct investment and backward spillovers in the Western Balkans: the context, opportunities and barriers to the development of regional supply chains," LSE Research Online Documents on Economics 115391, London School of Economics and Political Science, LSE Library.

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