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Value Added in Motion: Determinants of Value Added Location within the EU

Author

Listed:
  • Lionel Fontagné

    (PSE (Paris 1) and CEPII)

  • Gianluca Santoni

    (CEPII)

Abstract

In this paper we approach the determinants of value added location across European countries, from the recent developments to the 2035 horizon. In the first part of the paper, using detailed trade data, we show how competitiveness, demand and export composition have shaped the market shares of European countries, hence the location of production in Europe. Variance and covariance analysis point to the specificity of two countries: the overall market share development seems to be significantly affected by aggregate demand conditions in Germany and Italy. We then turn to trade in value added and observe that bigger countries tend to report a higher share of domestic value added because they can count on more efficient national value chains or a higher diversity of goods upstream. Interestingly, such evidence does not apply to Germany, or Poland, which exhibit a more dynamic insertion in international value chains. In the second part of the paper, we present the main prospects for the allocation of labour (i.e. migration), value added and the macro-economic effects of energy prices across European countries up to year 2035. The projections presented in the paper aim to summarize the main results obtained by other researchers within the "Value Added in Motion (VAM)" project.

Suggested Citation

  • Lionel Fontagné & Gianluca Santoni, 2017. "Value Added in Motion: Determinants of Value Added Location within the EU," Development Working Papers 424, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:424
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    References listed on IDEAS

    as
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    Cited by:

    1. Gabriele di Filippo, 2018. "What place does Luxembourg hold in global value chains?," BCL working papers 120, Central Bank of Luxembourg.

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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