IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2611.html

Trade and production fragmentation : Central European economies in European Union networks of production and marketing

Author

Listed:
  • Kaminski, Bartlomiej
  • Ng, Francis

Abstract

Developments driven by trade liberalization and tehcnological progress mean that old development strategies, based on state intervention and trade protection, no longer work. Global competition has brought a growing emphasis on product standards, rapid innovation, adaptability, and speedy response. Technology has made possible the fragmentation of production. Firms that become part of global production and distribution networks do not have to be foreign-owned, as many multinationals contract out the delivery of services and products. Foreign involvement facilitates the transfer of managerial and technological know-how, so firms benefit from becoming part of a network. Small producers, rather than servicing small local markets, can supply large firms abroad. Foreign participation--through outsourcing or direct investments--may offer direct access to a parent company's global networks. Becoming part of a multinational's production and distribution network is a cheap way to market products. But the unprecedented globalization of the production process has brought the integration of trade and the disintegration of production, with deep implications for the international division of labor. Have Central European economies been able to take advantage of the global fragmentation and disintegration of production and the division of labor? Ten countries--Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia--have made large strides toward readjusting their production structures to international markets, mainly in the European Union. And trade in industrial products has lost its pre-transition idiosyncratic character. All 10 economies apear to be on the same track as the European Union in changing patterns of trade with the networks the authors discuss. Progress is advanced in furniture (most of the 10 economies) and automobiles (the Czech Republic, Hungary, Poland, Slovakia, and Slovenia) and is gaining momentum in"information revolution"networks (Estonia and Hungary). Progress in industrial integration with the European Union has been uneven. The first-tier economies (the Czech Republic, Estonia, Hungary, Poland, Slovakia, and Slovenia) are much less so and, despite relatively low wages, have no comparative advantage in assembly in EU markets. Among first-tier economies, three stand out: Estonia and Hungary (in integration into"information revolution"markets) and Slovakia (in restructuring its automotive sector).

Suggested Citation

  • Kaminski, Bartlomiej & Ng, Francis, 2001. "Trade and production fragmentation : Central European economies in European Union networks of production and marketing," Policy Research Working Paper Series 2611, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2611
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/06/29/000094946_01061505074811/Rendered/PDF/multi0page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John Zysman & Andrew Schwartz, 1998. "Reunifying Europe in an Emerging World Economy: Economic Heterogeneity, New Industrial Options, and Political Choices," Journal of Common Market Studies, Wiley Blackwell, vol. 36(3), pages 405-429, September.
    2. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    3. Klaus E Meyer, 2000. "International Production Networks and Enterprise Transformation in Central Europe," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 42(1), pages 135-150, April.
    4. Ng, Francis & Yeats, Alexander, 1999. "Production sharing in East Asia : who does what for whom, and why?," Policy Research Working Paper Series 2197, The World Bank.
    5. Gary Hufbauer, 1970. "The Impact of National Characteristics & Technology on the Commodity Composition of Trade in Manufactured Goods," NBER Chapters, in: The Technology Factor in International Trade, pages 145-231, National Bureau of Economic Research, Inc.
    6. Roderick Martin, 1998. "Central and Eastern Europe and the international economy: The limits to globalisation," Europe-Asia Studies, Taylor & Francis Journals, vol. 50(1), pages 7-26.
    7. Michael Borrus & John Zysman, 1997. "Globalization With Borders," Industry and Innovation, Taylor & Francis Journals, vol. 4(2), pages 141-166.
    8. Djankov, Simeon & Hoekman, Bernard, 1996. "Intra-Industry Trade, Foreign Direct Investment and the Reorientation of East European Exports," CEPR Discussion Papers 1377, C.E.P.R. Discussion Papers.
    9. Irwin, Douglas A, 1996. "The United States in a New Global Economy? A Century's Perspective," American Economic Review, American Economic Association, vol. 86(2), pages 41-46, May.
    10. van Tulder, Rob & Ruigrok, Winifred, 1998. "European Cross-National Production Networks in the Auto Industry: Eastern Europe as the Low End of European Car Complex," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt35n5n451, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    11. Yeats, Alexander J., 1998. "Just how big is global production sharing?," Policy Research Working Paper Series 1871, The World Bank.
    12. Hoekman, Bernard & Djankov, Simeon, 1996. "Intra-industry trade, foreign direct investment, and the reorientation of Eastern European exports," Policy Research Working Paper Series 1652, The World Bank.
    13. Schwartz, Andrew & Zysman, John, 1998. "Reunifying Europe in an Emerging World Economy: Economic Heterogeneity, New Industrial Options, and Political Choices," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt60w702zc, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bartlomiej Kaminski & Beata Smarzynska, 2001. "Integration into Global Production and Distribution Networks through FDI: The Case of Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 13(3), pages 265-288.
    2. Kaminski, Bartlomiej, 2001. "How accession to the European Union has affected external trade and foreign direct investment in Central European economies," Policy Research Working Paper Series 2578, The World Bank.
    3. Michaël Freudenberg & Françoise Lemoine, 1999. "Central and Eastern European Countries in the International Division of Labour in Europe," Working Papers 1999-05, CEPII research center.
    4. Kaminski, Bartlomiej & Smarzynska, Beata K., 2001. "Foreign direct investment and integration into global production and distribution networks : the case of Poland," Policy Research Working Paper Series 2646, The World Bank.
    5. Yener Kandogan, 2004. "How Much Restructuring did the Transition Countries Experience? Evidence from Quality of their Exports," William Davidson Institute Working Papers Series 2004-637, William Davidson Institute at the University of Michigan.
    6. Pellegrin, Julie, 1999. "German production networks in Central, Eastern Europe: between dependency and globalisation," Discussion Papers, Research Unit: Economic Change and Employment FS I 99-304, WZB Berlin Social Science Center.
    7. Yener Kandogan, 2003. "TDoes Product Differentiation Explain The Increase in Exports of Transition Countries?," William Davidson Institute Working Papers Series 2003-599, William Davidson Institute at the University of Michigan.
    8. Yener Kandogan, 2003. "The Reorientation of Transition Countries??? Exports: Changes in Quantity, Quality and Variety," William Davidson Institute Working Papers Series 2003-631, William Davidson Institute at the University of Michigan.
    9. Paolo Guerrieri & Filippo Vergara Caffarelli, 2004. "International Fragmentation of Production and Euro-Med Integration," EUI-RSCAS Working Papers 28, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    10. Stoyan Totev & Grigor Sariiski, 2009. "Delocalisation Process and Changes of Competitive Advantages – A Survey of Enterprises," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 46-57.
    11. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November.
    12. Michael D. Bordo & Barry Eichengreen & Douglas A. Irwin, 1999. "Is Globalization Today Really Different than Globalization a Hunderd Years Ago?," NBER Working Papers 7195, National Bureau of Economic Research, Inc.
    13. Iga Magda & David Marsden & Simone Moriconi, 2012. "Collective Agreements, Wages, and Firms' Cohorts: Evidence from Central Europe," ILR Review, Cornell University, ILR School, vol. 65(3), pages 607-629, July.
    14. Michael C. Burda & Barbara Dluhosch, 2002. "Fragmentation, Globalisation and Labour Markets," International Economic Association Series, in: David Greenaway & Richard Upward & Katharine Wakelin (ed.), Trade, Investment, Migration and Labour Market Adjustment, chapter 4, pages 47-65, Palgrave Macmillan.
    15. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, . "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2).
    16. Gerhard Palme, 1998. "Auswirkungen der EU-Osterweiterung auf die österreichische Sachgüterproduktion. Ostöffnungseffekte beleben österreichische Industrie," WIFO Monatsberichte (monthly reports), WIFO, vol. 71(11), pages 761-769, November.
    17. Kevin H. O’Rourke, 2002. "Europe and the Causes of Globalization, 1790 to 2000," Palgrave Macmillan Books, in: Henryk Kierzkowski (ed.), Europe and Globalization, chapter 3, pages 64-86, Palgrave Macmillan.
    18. Y. Kandogan, 2003. "Reconsidering the adjustment costs of the Europe agreements," Applied Economics Letters, Taylor & Francis Journals, vol. 10(2), pages 63-68.
    19. Alexander Hijzen & Tomohiko Inui & Yasuyuki Todo, 2010. "Does Offshoring Pay? Firm‐Level Evidence From Japan," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 880-895, October.
    20. Wilhelm Kohler, 2002. "The Distributional Effects of International Fragmentation," Economics working papers 2002_01, Department of Economics, Johannes Kepler University Linz, Austria.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Studies on the automobile industry

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2611. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.