Frensch, Richard and Hanousek, Jan and Kocenda, Evzen (2016) Trade in Parts and Components across Europe. FINANCE A UVER-CZECH JOURNAL OF ECONOMICS AND FINANCE, 66 (3). pp. 236-262. ISSN 0015-1920,
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Based on the factor-proportion gravity framework, we build a model that identifies the driving forces for trade in parts and components. We test our model empirically by using a detailed and large European data set. We show that trade in parts and components is driven by relative supply-side country differences, proxied by wages and capital labor ratios. The pattern is compatible with models of incomplete specialization and trade. We take our results as evidence for the existence of international East-West production networks in Europe, driven by tradeoffs between wages, capital labor ratios and coordination costs. Our results also reveal that (i) in response to stronger relative wage differences, trade in parts and components across Europe is predominantly conducted along the extensive margin but (ii) the potential to intensify the trade and international production network in new EU members has not been exhausted yet.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | INTERNATIONAL-TRADE; PROCESSING TRADE; GRAVITY EQUATION; PANEL-DATA; EU; FRAGMENTATION; COUNTRIES; MARKETS; INTEGRATION; AGREEMENTS; international trade; production networks; gravity model; panel data; European Union |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Außenhandel (Professor Dr. Richard Frensch) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 18 Mar 2019 11:17 |
| Last Modified: | 18 Mar 2019 11:17 |
| URI: | https://pred.uni-regensburg.de/id/eprint/2642 |
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