Drivers of Integration into a Regional Trade Bloc and their Impact on Productivity
Auftraggeber: Europäische Kommission, Rahmenprogramm
Studie von: Österreichisches Institut für Wirtschaftsforschung – Centraal Bureau voor de Statistiek – Istituto Nazionale di Statistica – Lunaria Associazione di Promozione Sociale e Impresa Sociale – United Nations University – Maastricht Economic and Social Research Institute on Innovation and Technology – Fondation Nationale des Sciences Politiques – Scuola superiore Sant'Anna – Statistik Austria – University College London – Universität Ljubljana – Universität Tartu – Katholieke Universiteit Leuven – Zentrum für Europäische Wirtschaftsforschung – Universität Bielefeld
This paper studies how the integration into a deep Regional Trade Agreement affects sector level productivity. Using the EU as an example, we construct an integration indicator that measures integration into the Single Market relative to global value chains. The results of a simultaneous equation model show an overall positive effect of integration on labour productivity, which is driven by upstream integration. Market distortions in regional value chains accumulate downstream and negatively affect productivity. Better domestic institutions facilitate the integration process at the industry level for both Member States and Non-Member States. Then again, better institutions seem to be more favourable to the integration of industries with less complex product portfolios and lower levels of knowledge cumulativeness.
JEL-Codes:F13, F14, O25, O43, O52
Forschungsbereich:Industrie-, Innovations- und internationale Ökonomie