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Production Integration in the European Union

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  • Hakan Nordström
  • Harry Flam

Abstract

Measured by trade in intermediate inputs, economic integration has increased between 2000 and 2014 between members of the European Union and even more with non-members. Integration is negatively related to economic size and positively to the number of years as a member. Germany is the largest hub in the production network and the centre of gravity has moved eastward. Older member states are increasingly exporting service inputs and new member states primary and manufacturing inputs. Wages are increasing faster in countries with low initial wages, indicating wage convergence as a result of production integration.

Suggested Citation

  • Hakan Nordström & Harry Flam, 2018. "Production Integration in the European Union," CESifo Working Paper Series 6944, CESifo.
  • Handle: RePEc:ces:ceswps:_6944
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    More about this item

    Keywords

    global value chains; economic integration; input-output models; wage convergence;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • F10 - International Economics - - Trade - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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