Abstract
This paper studies the interplay of integration into EU value chains and industrial development measured by labour productivity. We focus on the mediating role of domestic institutions compared to technological determinants for the distribution of the economic value generated along the European and global value chains. Our integration indicator measures value chain trade within the Single Market relative to global value chain networks. Using a simultaneous equation model, we find an overall positive effect of integration on labour productivity, which is driven by upstream integration. While the effect of productivity on integration is positive, it decreases with increasing productivity levels. Highly productive industries rather seek global value chain trade than regional integration. Better domestic institutions facilitate EU integration, although they favour industries with less complex product portfolios and lower levels of knowledge cumulativeness. This creates politically unwanted specialisation effects leading to an unequal distribution of the economic value generated.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.