Trade openness and international fragmentation of production in the European Union: the new divide?

Paolo Guerrieri () and Filippo Vergara Caffarelli
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Paolo Guerrieri: Sapienza, University of Rome

No 855, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper analyses the relationship between international fragmentation of production, trade openness and global export performance in the European Union from 2000 to 2009. As most trade models featuring international production sharing show, the higher the level of fragmentation and related international openness the better the export performance of a country. Our econometric analysis confirms this hypothesis. We estimate an error correction model based on panel data on the EU Member States and find that inter-European fragmentation and openness significantly improve their long-run export performance. Policy implications could be that restrictive policies preventing firms from internationalizing production would weaken a country�s position in global production networks, with long-term negative effects on domestic jobs and growth.

Keywords: international fragmentation of production; trade openness; export performance; European Union (search for similar items in EconPapers)
JEL-codes: F14 L23 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Trade Openness and International Fragmentation of Production in the European Union: The New Divide? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_855_12

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