Global shocks and the dynamics of EU countries' specialisation

Abstract

AbstractThis article empirically investigates the effects of global shocks on EU‐28 countries' patterns of specialisation by focusing on the global financial crisis of 2008. In particular, it addresses the following two research questions: Did the financial crisis change the patterns of specialisation of EU member states? Was the impact of the crisis homogenous across countries and manufacturing products? Answering these questions is important because changes in specialisation generate inequalities, given the shift of the demand from one factor to another. Using an unconditional quantile regression approach, this study demonstrates that the financial crisis had a positive effect which was larger on products in which countries were not specialised before the crisis. Some heterogeneity also emerged at both sectoral and geographical levels.