Title: The EU´s Shrinking Share in Global Manufacturing: A Value Chain Decomposition Analysis
Authors: MARSCHINSKI ROBERTMARTINEZ TUREGANO DAVID
Citation: NATIONAL INSTITUTE ECONOMIC REVIEW vol. 252 p. R19-R32
Publisher: SAGE PUBLICATIONS
Publication Year: 2020
JRC N°: JRC120408
ISSN: 0027-9501 (online)
URI: https://www.cambridge.org/core/journals/national-institute-economic-review/article/eus-shrinking-share-in-global-manufacturing-a-value-chain-decomposition-analysis/1E8CE2EAADFC6F48FF182C740C8FCE04
https://publications.jrc.ec.europa.eu/repository/handle/JRC120408
DOI: 10.1017/nie.2020.18
Type: Articles in periodicals and books
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%, 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% of the EU´s loss of global share are explained by its lower participation in manufacturing value chains, which confirms a downturn of 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.
JRC Directorate:Growth and Innovation

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