Documents Hanzl-Weiß, Doris 5 results

"This paper examines current account developments in different country groups amongst the lower- and medium-income European economies (LMIEs) both prior to the crisis and following it. The Baltic countries, the Western Balkan as well as the Southern EU countries (Greece, Portugal and Spain) showed rather dramatic deteriorations in their current accounts prior to the outbreak of the financial crisis in 2008/2009, while in the Central and Eastern European countries current account deficits never exploded. What drove current account developments before the crisis and have external imbalances been sustainably corrected? We investigate whether and to which extent adjustments took place in terms of trade performance, real effective exchange rates and components of unit labour costs. Finally, we look at developments of the tradable and non-tradable sectors of the economy and find that ‘structural' current account problems are grounded in persistent weaknesses of the tradable sector. As such, policy implications would entail that countries which suffer from longer-term ‘structural' external imbalances have to strongly focus their policy attention on a recovery of the tradable sector."

This study investigates in detail value chain trade of the EU and its Member States, compares it to that of other trading blocs and regions such as NAFTA and East Asia, and delves into implications of value chain trade on specialisation and competitiveness as well as on the declining income elasticity of trade. The analysis of value chain (VC) trade, understood as trade that involves internationally organised production processes, is based on the latest update of the World Input-Output Database (WIOD). It relies to a large extent on a forward production integration measure termed re-exported domestic value added (DVAre) which comprises exports of intermediates that cross international borders at least twice. Results confirm the conjecture that the expansion of international value chains has come to a halt in the post-crisis period (2011-2014). Still, the EU's VC trade was growing at the same pace as value added exports in general in the post-crisis years, implying that value chains were not dismantled. In contrast, worldwide VC trade was indeed less dynamic than value added exports, which could be seen as a sign that some value chains are on the retreat. Zooming closer into the EU, there was a marked reshuffling of market shares of Member States in EU-wide VC trade from large Member States such as France, Italy and the United Kingdom towards a group of Central European (CE) economies – Germany, Austria, the Czech Republic, Hungary, Poland and Slovakia – which together form the Central European Manufacturing Core. Looking at the question whether VC trade is rather regional in scope, VC trade is separated into regional value chain (RVC) trade – involving only regional production partners – and global value chain (GVC) trade – involving also extra-regional partner countries. For the EU as a whole this split is about half-half, with only a slight move towards GVC trade between 2000 and 2014. Strikingly, demand is strongly shaping the organisation of production: while RVCs are predominantly producing for the EU market, GVCs are predominantly procuring for third countries. As regards implications of value chain trade, these are harder to assess. Overall, implications for structural change and competitiveness are rather country and context specific. Changes in attitudes towards international value chains contributed to the significant decline in the income elasticity of trade."

Several years after the global slump, the construction industry and many countries and sectors with construction-related activities and firms tied to them still feel the impact of that financial and economic crisis. In contrast, several years prior to the crisis, there had been a major construction bubble. This report outlines the significance of the construction sector for the EU economy, given its potential in job creation in micro and small enterprises as well as its role as a major consumer of intermediate products and related services. Developments within the industry have wide-reaching implications for the nature of growth that can be achieved, not least in terms of achieving the ambition of smart, sustainable and inclusive growth that is at the heart of the Europe 2020 strategy. Furthermore, a modernisation of the sector and improvements in the efficiency of building construction are also key aspects for the transformation of the EU's energy system as pointed out in the ‘Energy Roadmap 2050'. In this context, the Commission introduced its ‘Strategy for the sustainable competitiveness of the construction sector and its enterprises' that contained a proposed Action Plan Construction 2020 aimed at addressing challenges within the 2020 time horizon. This Action Plan focuses on five thematic priorities which aim to address economic, skills, environmental, regulatory, and international challenges. This study provides an assessment of the role and dynamics of the construction industry in the European Union and its interlinkages with other industries over the last fifteen years. The report draws a picture of a sector in transformation, partly still suffering from the ramifications of the global crisis, and points to the new foundations from which the sector and the whole value chain can develop towards the future."