Barriers to cross-border trade in intermediate goods within regional value chains in the CEFTA region

Besnik Krasniqi, Jasmina Ahmetbasić and Will Bartlett

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper investigates the barriers to the development of regional supply chains to support the growth of regional trade in the CEFTA region. The paper first identifies the way in which regional FTAs such as CEFTA may bring about structural change and tendencies to either convergence or divergence among partner economies. Tendencies to agglomeration of benefits in countries with strong manufacturing sectors are identified. In the case of CEFTA we show that Serbia (and to some extent North Macedonia and Bosnia and Herzegovina) has used its policy of subsidising FDI in the manufacturing sector by establishing a network of special economic zones (SEZs) to gain an advantage on the regional market through boosting its capacity for the production of manufactured goods for export. We argue that the tendency towards economic divergence within CEFTA that this creates could potentially be offset by developing regional value chains to supply inputs to multinational companies based in SEZs. However, there are many barriers to the development of such cross-border regional value chains. The paper presents some qualitative research findings that reveal the range of barriers to the development of regional value chains involving SMEs. It concludes with some reflections of how policy could be focused to best reduce the barriers to regional value chains, with the aim of harnessing the opportunities offered by CEFTA to reverse the process of divergence among partner economies.

JEL-codes: J01 L81 R14 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-11-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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