Abstract
Production processes are nowadays increasingly global, implying interdependent structures linking goods, processes and countries. Traditional economic blocks and sectoral intra-country linkages coexist with increasing worldwide dependencies. Recent literature supports the hypothesis of a new globalization process taking place in the late 1990s and the 21st century, centred on the consolidation of increasingly competitive macro-regions at a global level, with a growing specialization of countries within them. We propose a multiregional input-output (MRIO) model of the European Union (EU) to analyse whether the generation of employment and income in Europe in recent decades can be defined as a process that is mainly regional or global (involving countries within the region versus countries outside Europe). Our results show that intra-EU trade is an important factor contributing to income and employment growth, more oriented to intermediate inputs in the same way as extra-EU trade, despite the fact that some European countries are more specialized in final goods, mainly driven by high-income EU countries.
Highlights
IntroductionTrade has been traditionally considered a key factor for the growth of economies, encouraging country specialization and competitiveness
Our results suggest that intra-European Union (EU) trade has been an important factor contributing to the income and employment growth in the EU, extra-EU trade has turned out to be a key driver for the whole EU, and different country patterns regarding the orientation of trade can be identified
We present the general results obtained from the analysis of value added and employment embodied in EU trade flows, with a particular focus on intra-EU trade
Summary
Trade has been traditionally considered a key factor for the growth of economies, encouraging country specialization and competitiveness. Production processes are nowadays characterized by an important international fragmentation, which implies an increasingly interdependent structure linking products, goods, processes and countries (see Yu et al, 2013 and Duarte et al 2018) This increasing globalization of production, often involving large geographical and sectoral distances between the production and the consumption, has brought to the fore the need for accounting and analysing production structures and international links in this complex framework. Traditional economic blocks and strong intra-regional links coexist with increasing world dependencies, this having associated impacts on the location and distribution of employment and income In this line, Los et al (2013) show evidence in this phenomenon using a new distribution index of value added, which they call the international production fragmentation (IPF). Timmer et al (2014) conduct a study of global
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