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Vertical Innovation and Catching-Up: Implications of EU Integration for CEECs-5

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  • Eleonora Cavallaro
  • Marcella Mulino

Abstract

We analyze the role of vertical innovation in trade patterns for developing economies trading with technologically advanced countries. A model is presented where the international diffusion of knowledge, promoted by economic integration, is the source of a technological catching up and leads to a convergence in the quality of traded goods, with a positive effect on exports. We then turn our attention on the evolution of trade between the Central and Eastern European countries (CEECs-5) and their European Union partner countries, assessing whether economic integration has increase the quality of the goods produced. For the period 1995–2005, we find evidence of the increasing role of intra-industry trade and vertical differentiation and a process of specialization in higher quality products, especially in the medium- and high-skill sectors. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • Eleonora Cavallaro & Marcella Mulino, 2008. "Vertical Innovation and Catching-Up: Implications of EU Integration for CEECs-5," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(3), pages 265-279, August.
    • Handle: RePEc:kap:iaecre:v:14:y:2008:i:3:p:265-279:10.1007/s11294-008-9160-0
    DOI: 10.1007/s11294-008-9160-0
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    Cited by:

    1. Cavallaro, Eleonora & Mulino, Marcella, 2008. "Technological diffusion and dynamic gains from trade," MPRA Paper 13793, University Library of Munich, Germany.
    2. Eleonora Cavallaro & Piero Esposito & Alessia Matano & Marcella Mulino, 2013. "Technological Catching Up, Quality of Exports, and Competitiveness: A Sectoral Perspective," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(6), pages 4-21, November.
    3. Dumitru Miron & Alina Mihaela Dima & Simona Vasilache, 2010. "Models Of The Intra-Regional Trade Influence On Economic Sustainable Development In Romania," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 12(27), pages 27-35, February.
    4. Guglielmo Maria Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "Trade Specialisation and Economic Convergence: Evidence from Two Eastern European Countries," Discussion Papers of DIW Berlin 875, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Vertical innovation; Technological catching up; Quality upgrading and trade; Economic integration; F01; F10; O40; O52; O57;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F10 - International Economics - - Trade - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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