Comparative advantage of the EU in global value chains: How important and efficient are new EU members in transition?

Abstract

In economic analysis, the measures of competitiveness are expressed in terms of shares of gross output in world export markets. In recent years, these types of mea- sures have become questioned, as one could observe the increasing fragmentation of production across borders. Due to easier communication, increasing information flow, and changes in coordination costs, the various stages of the production process are no longer conducted at geographically close locations. The rising fragmentation of production implies that more and more stages of the production process are faced with international competition. In the past decades, the competitiveness of countries was mainly determined by domestic firms. In most cases, these companies competed ‘sector to sector’ with similar firms from other countries. The competition was usually taking place in the sphere of the price and quality of traded products.