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The Impact of the Increasing International Division of Labour on Europe's Foreign Trade

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Listed:
  • Stephan Betschart
  • Rita Kobel Rohr
  • Christoph Mosimann
  • Christoph Siepmann

Abstract

What are the consequences of European economies' goods structure for their exports as they face Asian competition? Over the last 30 years, the share of East Asian nations in international merchandise trade has been growing noticeably. This rise is often explained by the notion that Asian countries developed a network in which the production of mainly machinery goods has been split up along the production chain over different (Asian) countries and firms. Even though European imports from and exports to Asian countries currently account for only a relatively small fraction of Europe's total trade, this share is increasing. Thus, the question regarding export perspectives of the European industry facing Asian competition arises. Based on the goods structure of eleven European and five Asian economies as well as the USA using the Standard International Trade Classification at the 1- and 2-digit level, similarities, differences and trends over time are analysed. The additional distinction of the export structure by stage of production (on the basis of the Broad Economic Categories of the United Nations) provides some information with respect to whether an economy is more assembly-based and less research-based or not. Moreover, special attention is given to the share in high-tech goods of the selected countries. Exports of hightech products expand more strongly with spill-over effects on other sectors of an economy. A look at the development of trade balances completes the picture, which of the European economies considered have more favourable export perspectives in the medium term and which ones less so.

Suggested Citation

  • Stephan Betschart & Rita Kobel Rohr & Christoph Mosimann & Christoph Siepmann, 2005. "The Impact of the Increasing International Division of Labour on Europe's Foreign Trade," KOF Working papers 05-104, KOF Swiss Economic Institute, ETH Zurich.
  • Handle: RePEc:kof:wpskof:05-104
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    File URL: http://dx.doi.org/10.3929/ethz-a-005104772
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