Trade in Value Added(TiVA) in EU New Member States (EU NMS)

Abstract

Contemporary trade analysis indicates the necessity of calculating trade in value added (TiVA) which is created through global value chains (GVCs). This paper aims to determine the characteristics and importance of GVC trade in the EU new member states (EU NMS) with special emphasis placed on the industry level. The results demonstrate different levels of GVC participation of the EU NMS, where Hungary is the most integrated country and Croatia the least integrated. Regional GVCs exist because a huge part of value added (VA) comes from EU member states, as in gross export as well as in final demand (Europe as a hub). The most important source countries are Germany and Italy and there is also evidence of geographical and historical relations between the countries. The domination of backward participation has been found in the analysis made on the industrial level, i.e. the EU NMS are highly dependent on the import of intermediates for the production and export of final products. Strong interconnections between imports of intermediate products and exports of final products have been found in the manufacture of computers, electronics and optical products; manufacture of wood, paper, printing and reproduction. This research has contributed to the scarce literature concerning GVC (TiVA) in EU NMS and has opened up new possibilities for further research and analysis.