Publication

Fragmentation, incomes and jobs: an analysis of European competitiveness

Timmer, M. P., Los, B., Stehrer, R. & de Vries, G. J., Oct-2013, In : Economic Policy. 28, 76, p. 613-661 49 p.

Research output: Contribution to journalArticleAcademicpeer-review

Increasing fragmentation of production across borders is changing the nature of international competition. As a result, conventional indicators of competitiveness based on gross exports become less informative and new measures are needed. In this paper we propose a new concept based on the value added that countries contribute to the production of final manufacturing goods, called global value chain (GVC) income'. We develop an ex-post accounting framework to measure this and provide trends for European countries based on a recent multi-sector input-output model of the world economy. We find that gross exports overestimate the competitiveness of economies that rely heavily on imported intermediates, and this bias has increased over time. Based on GVC incomes, we find that revealed comparative advantage of the EU27 is shifting to activities related to the production of non-electrical machinery and transport equipment, and away from non-durables. We also find that the number of jobs involved (GVC jobs) is declining and increasingly carried out by high-skilled workers outside the manufacturing sector, highlighting the uneven distributional consequences of production fragmentation. The results show that a GVC perspective on competitiveness is needed to better inform the policy debates on globalization. Marcel P. Timmer, Bart Los, Robert Stehrer and Gaaitzen J. de Vries

Original languageEnglish
Pages (from-to)613-661
Number of pages49
JournalEconomic Policy
Volume28
Issue number76
Publication statusPublished - Oct-2013

    Keywords

  • VERTICAL SPECIALIZATION, UNITED-STATES, VALUE CHAINS, WORLD-TRADE, OUTPUT, INPUT, INDUSTRY, ECONOMY, GROWTH

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