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THE DETERMINANTS OF VALUE ADDED TRADE IN THE EU (EU-15 vs. CEE)

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  • Petra Adelajda Zaninovic

    (University of Rijeka, Faculty of Economics)

Abstract

The aim of this paper is to estimate the effects of individual determinants on the value added trade, and to analyse whether and to what extent these effects differ between the old (EU-15) and the new (CEE) member states. Domestic value added included in gross foreign exports (DVAFX) is used as a proxy variable for value added trade. The analysis that was conducted from 2000 to 2019 covered 130 countries and was based on the structural gravity model. Variables included in the analyses are position in the supply chain, technological development, ICT development and institutional and border efficiency. To solve the problem of third-country effects and potential endogeneity issues, the model includes the year fixed effects, the country-pair effects, and the exporter and importer fixed effects. The Poisson Pseudo Maximum Likelihood Estimator (PPML) was used for the original estimation, while the GMM system estimator for dynamic panel data models was used for the robustness check. The results show that the efficiency of institutions and borders, technological development and upstream position in global value chain are significant for the supply chain exports. The effects of technological development and upstream position are even greater for the CEE countries compared to the EU-15 countries.

Suggested Citation

  • Petra Adelajda Zaninovic, 2022. "THE DETERMINANTS OF VALUE ADDED TRADE IN THE EU (EU-15 vs. CEE)," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 31(1), pages 211-236, june.
    • Handle: RePEc:avo:emipdu:v:31:y:2022:i:1:p:211-236
    DOI: 10.17818/EMIP/2022/1.10
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    More about this item

    Keywords

    trade in value added; global value chains; gravity model; PPML; GMM;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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