Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-25T19:28:36.332Z Has data issue: false hasContentIssue false
  • English
  • Français

THE EU’S SHRINKING SHARE IN GLOBAL MANUFACTURING: A VALUE CHAIN DECOMPOSITION ANALYSIS

Published online by Cambridge University Press:  28 April 2020

Robert Marschinski  and
David Martínez-Turégano
Robert Marschinski
Affiliation:
Joint Research Centre, European Commission, Seville.
David Martínez-Turégano*
Affiliation:
Joint Research Centre, European Commission, Seville.
*
Corresponding author’s e-mail: David.Martinez-Turegano@ec.europa.eu.
Get access Rights & Permissions [Opens in a new window]

Abstract

The EU´s falling share in global manufacturing has fuelled concerns about an overall loss of EU competitiveness, in particular vis-à-vis China. We analyse the empirical evidence underlying these concerns by applying a newly developed decomposition technique to global input-output data spanning the years 2000 to 2014. Our results confirm the diminishing role of the EU in manufacturing value chains, but also show that this is mostly, by nearly 75 per cent, a consequence of the geographical and sectoral reallocation of global demand, reflecting the lower economic growth in the EU relative to the rest of the world. Still, the other almost 25 per cent of the EU’s loss of global share is explained by its lower participation in manufacturing value chains, which confirms a downturn in EU competitiveness. By extending the analysis to individual manufacturing activities we show that this general trend is more pronounced for low-tech (e.g. textiles) than high-tech sectors, with pharmaceuticals emerging as the most resilient EU industry. Policy concerns appear to be most warranted for electronics, a key sector for which the EU´s global share fell even more than for overall manufacturing, without evidence that EU value added from upstream service inputs could significantly mitigate this trend.

Keywords

Manufacturingvalue addedglobal value chainscompetitivenesselectronicsF14L16L60.
Type
Research Article
Information
National Institute Economic Review , Volume 252 , May 2020 , pp. R19 - R32
Copyright
© National Institute of Economic and Social Research, 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the European Commission.

References

REFERENCES

Bernard, A.B., Smeets, V. and Warzynski, F. (2017), ‘Rethinking deindustrialization’, Economic Policy, 32(89), pp. 5–38.CrossRefGoogle Scholar
Cezar, R., Adrien, D., Gaulier, G. and Vicard, V. (2017), ‘Competition for global value added: export and domestic market shares’, Banque de France Working Paper No. 628.Google Scholar
De Backer, K., Miroudot, S. and Ragoussis, A. (2013), ‘Manufacturing in global value chains’, in Veugelers, R. (Ed.), Manufacturing Europe’s Future, Bruegel Blueprint Series 21, Bruegel Institute.Google Scholar
European Commission (2012), A Stronger European Industry for Growth and Economic Recovery, Industrial Policy Communication Update. COM(2012) 582 final.Google Scholar
European Commission (2014), For a European Industrial Renaissance, COM(2014) 14 final.Google Scholar
European Commission (2017), Investing in a Smart, Innovative and Sustainable Industry. A renewed EU Industrial Policy Strategy, COM(2017) 479 final.Google Scholar
Felipe, J. and Mehta, A. (2016), ‘Deindustrialization? A global perspective’, Economics Letters, 149, pp. 148–51.CrossRefGoogle Scholar
Fort, T.C. and Klimek, S.D. (2016), The Effects of Industry Classification Changes on US Employment Composition, Tuck School at Dartmouth.Google Scholar
Galindo-Rueda, F. and Verger, F. (2016), OECD Taxonomy of Economic Activities Based on R&D Intensity, OECD Science, Technology and Industry Working Papers, No. 2016/04, OECD Publishing, Paris, https://doi.org/10.1787/5jlv73sqqp8r-en.CrossRefGoogle Scholar
Hummels, D., Ishii, J. and Yi, K.M. (2001), ‘The nature and growth of vertical specialization in world trade’, Journal of international Economics, 54(1), pp. 75–96.CrossRefGoogle Scholar
JRC [Joint Research Centre] (2019), China: Challenges and Prospects from an Industrial and Innovation Powerhouse, JRC Science for Policy Report EUR 29737 EN.Google Scholar
Leontief, W. (1986), Input-output Economics, 2nd edition, Oxford University Press.Google Scholar
Marschinski, R. and Martínez-Turégano, D. (2019), Reassessing the Decline of EU Manufacturing: A Global Value Chain Analysis, JRC Technical Report EUR 29999 EN.Google Scholar
Miroudot, S. (2019), ‘Services and manufacturing in global value chains: is the distinction obsolete?’, ADBI Working Paper 927.CrossRefGoogle Scholar
Pisano, G. and Shih, W. (2012), Producing Prosperity: Why America Needs a Manufacturing Renaissance, Harvard Business Review Press.Google Scholar
Timmer, M.P., Los, B., Stehrer, R. and De Vries, G.J. (2013), ‘Fragmentation, incomes and jobs: an analysis of European competitiveness’, Economic Policy, 28(76), pp. 613–61.CrossRefGoogle Scholar
Timmer, M.P., Los, B., Stehrer, R. and De Vries, G.J. (2016), ‘An anatomy of the global trade slowdown based on the WIOD 2016 release’ (No. GD-162), Groningen Growth and Development Centre, University of Groningen.Google Scholar
Veugelers, R. (2013), Manufacturing Europe’s Future, Bruegel Blueprint Series, Vol. 21.Google Scholar
Veugelers, R. (2017), Remaking Europe: the new manufacturing as an engine for growth, Bruegel Blueprint Series, Vol. 26.Google Scholar