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Value Added in Motion: Determinants of Value Added Location within the EU

Lionel Fontagné and Gianluca Santoni ()
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Lionel Fontagné: PSE (Paris 1) and CEPII

Authors registered in the RePEc Author Service: Lionel Fontagné ()

No 424, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: In this paper we approach the determinants of value added location across European countries, from the recent developments to the 2035 horizon. In the first part of the paper, using detailed trade data, we show how competitiveness, demand and export composition have shaped the market shares of European countries, hence the location of production in Europe. Variance and covariance analysis point to the specificity of two countries: the overall market share development seems to be significantly affected by aggregate demand conditions in Germany and Italy. We then turn to trade in value added and observe that bigger countries tend to report a higher share of domestic value added because they can count on more efficient national value chains or a higher diversity of goods upstream. Interestingly, such evidence does not apply to Germany, or Poland, which exhibit a more dynamic insertion in international value chains. In the second part of the paper, we present the main prospects for the allocation of labour (i.e. migration), value added and the macro-economic effects of energy prices across European countries up to year 2035. The projections presented in the paper aim to summarize the main results obtained by other researchers within the "Value Added in Motion (VAM)" project.

Keywords: Export competitiveness; trade performance; trade patterns after the global crisis (search for similar items in EconPapers)
JEL-codes: F10 F14 F40 C43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-int
Date: 2017-02-24, Revised 2017-02-24
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