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Diagonal cumulation of origin as the EU’s institutional incentive mechanism for promoting international trade and business

Author

Listed:
  • Milan Jurse

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

  • Klavdij Logozar

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

  • Romana Korez Vide

    (University of Maribor, Faculty of Economics and Business, Maribor, Slovenia)

Abstract

In this paper we explore the effects of a diagonal cumulation of origin as the EU’s Common Commercial Policy (CCP) incentive mechanism that affects the intra- regional trade and transaction cost structure of firms engaged in cross-border business operation. The research explores how firms should frame their cross- border physical flows of goods and the configuration of their value-adding processes for taking advantage of diagonal cumulation of origin. The empirical analysis is based on an in-depth case study of effects of the ‘SAP+ diagonal cumulation of origin’ on changes in the transaction cost structure of a selected Slovenian firm operating within the household-appliance sector in one of the Western Balkan Countries. Based on eligibility of local subsidiary for using origin of goods in its import/export transactions the cost calculations were made for its products and then three different business scenarios were developed for showing the effects of the mechanism on transaction cost changes of a firm. The paper concludes that, at the conceptual level, the mechanism of diagonal cumulation of origin may serve as an effective institutional cross-border trade-promoting tool.

Suggested Citation

  • Milan Jurse & Klavdij Logozar & Romana Korez Vide, 2010. "Diagonal cumulation of origin as the EU’s institutional incentive mechanism for promoting international trade and business," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 28(2), pages 221-250.
    • Handle: RePEc:rfe:zbefri:v:28:y:2010:i:2:p:221-250
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    References listed on IDEAS

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    More about this item

    Keywords

    international business; institutional incentive mechanism; diagonal cumulation of origin; European Union; transaction costs; Western Balkan Countries;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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