Economic Integration and Productive Specialization in the EU27: does FDI influence Countries’ Specialization?

Natalia Vechiu and Farid Makhlouf
Additional contact information
Natalia Vechiu: CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour

Working Papers from HAL

Abstract: The objective of this article is two folded. Firstly, we proceed to an analysis of the evolution of productive specialization in the enlarged EU, taking into account all its actual 27 member countries. Given their decomposability properties, we use the entropy-based indices to measure countries' relative specialization and then, given our rather short period of analysis, we use the bootstrap method to analyze the evolution of the specialization index. We first analyze all economic sectors and then, our analysis is more detailed focusing on manufacturing industries. Globally, we find that specialization is decreasing across all economic sectors, while it is increasing across manufacturing industries. Secondly, we study specialization determinants, with a special interest for the impact of foreign direct investment (FDI). For homogeneity reasons, we analyze two separate samples, one including only developed countries of the European Union and the other, only developing member countries. In order to take into account endogeneity highly probable of most of our independent variables, we use the vector autoregression (VAR) technique and analyse the impulse response functions. Globally, FDIs seem to positively influence countries' relative specialization, for our both samples and for both economic sectors and manufacturing industries. However, their impact appears weaker than most of the other independent variables, such as market potential or relative endowments.

Keywords: Entropy; Specialization; Foreign Direct Investment; European Union (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-int
Note: View the original document on HAL open archive server: https://univ-pau.hal.science/hal-01885158v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://univ-pau.hal.science/hal-01885158v1/document (application/pdf)

Related works:
Working Paper: Economic Integration and Productive Specialization in the EU27: does FDI influence Countries’ Specialization? (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01885158

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().