Trade in parts and components across Europe

Richard Frenscha (), Jan Hanousekb () and Evžen Kočenda
Additional contact information
Richard Frenscha: Department of Economics, University of Regensburg
Jan Hanousekb: CERGE-EI, Charles University

No 939, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: Based on the factor-proportion gravity framework we build a model that identifies driving forces for trade in parts and components. We test our model empirically by using a detailed and large European data set. We show that trade in parts and components is driven by relative supply-side country differences, proxied by wages and capital labor ratios. The pattern is compatible with models of incomplete specialization and trade. We take our results as evidence for the existence of international East-West production networks in Europe, driven by trade-offs between wages, capital labor ratios and coordination costs. Our results also reveal that (i) in response to stronger relative wage differences trade in parts and components across Europe is predominantly realized along the extensive margin but (ii) potential to intensify the trade and international production network in new EU members is not exhausted yet.

Keywords: International trade; production networks; gravity model; panel data; European Union (search for similar items in EconPapers)
JEL-codes: C23 F14 F23 (search for similar items in EconPapers)
Pages: 29pages
Date: 2016-04
New Economics Papers: this item is included in nep-eur, nep-int and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.kier.kyoto-u.ac.jp/DP/DP939.pdf (application/pdf)

Related works:
Journal Article: Trade in Parts and Components across Europe (2016)
Working Paper: Trade in parts and components across Europe (2015)
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:kyo:wpaper:939

Access Statistics for this paper

More papers in KIER Working Papers from Kyoto University, Institute of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Makoto Watanabe ().