Growing inflows of FDI and the increasing integration of domestic firms into International Production Networks (IPNs) set up by EU-15 partners have yielded a rise in trade in parts and components for Central and Eastern European Countries (CEECs). As a consequence, new patterns of localization of industrial activities have been observed in the region since the mid-1990s. In this paper, I propose a comprehensive model of trade and production which tries to explain crosscountry variations of sectoral output by comparative advantages (Ricardo, Heckscher–Ohlin) and agglomeration forces (home market effect, market potential), with a focus on the role played by trade in middle products. The empirical implementation reveals that the higher is the involvement in IPNs the larger is the domestic share of regional output. Comparative advantages are a crucial determinant of localization as opposed to agglomeration forces. I argue that these results can be interpreted as an assessment of the predictive power of two alternative trade theories

Trade in parts and components and the industrial geography of Central and Eastern European countries / G. De Simone. - In: REVIEW OF WORLD ECONOMICS. - ISSN 1610-2878. - 144:3(2008), pp. 428-457.

Trade in parts and components and the industrial geography of Central and Eastern European countries

G. De Simone
Primo
2008

Abstract

Growing inflows of FDI and the increasing integration of domestic firms into International Production Networks (IPNs) set up by EU-15 partners have yielded a rise in trade in parts and components for Central and Eastern European Countries (CEECs). As a consequence, new patterns of localization of industrial activities have been observed in the region since the mid-1990s. In this paper, I propose a comprehensive model of trade and production which tries to explain crosscountry variations of sectoral output by comparative advantages (Ricardo, Heckscher–Ohlin) and agglomeration forces (home market effect, market potential), with a focus on the role played by trade in middle products. The empirical implementation reveals that the higher is the involvement in IPNs the larger is the domestic share of regional output. Comparative advantages are a crucial determinant of localization as opposed to agglomeration forces. I argue that these results can be interpreted as an assessment of the predictive power of two alternative trade theories
Comparative advantages; Economic geography; Fragmentation of production; Industry localization; New trade theory; Trade in parts and components
2008
http://www.springerlink.com/content/x4q7x06822046x11/fulltext.pdf
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/53093
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