European Economic Integration and Comparative Advantages

Abstract

On the basis of a set of Input-Output tables we computed the European Net Product Possibility Frontier (NPPF) for the years from 1995 to 2011. During this period, several barriers to trade have been removed, allowing higher levels of trade and regional integration. Subsequently, we propose a method to check whether the prediction to be derived from Comparative Advantages (CAs) theory, namely, a specialization pattern that allows to reach the NPPF, is verified. The results suggest that CAs were not exploited well during the period considered and no positive trend emerged. The implication of our results is that there is ample scope for a coordinated policy aimed at improving allocation of resources. Further research on this topic seems to be necessary.

Production of commodities by means of commodities and non‐uniform rates of profits

“…Recent work has attempted to link the observations embedded in national accounting and/or input–output tables with the theoretical results derived from Sraffian schemes, including (Han & Schefold, ; Mariolis & Tsoulfidis, ; Boglioni & Zambelli, ; Shaikh, ; Zambelli, Fredholm, & Venkatachalam, ; Zambelli, ), who make use of wage–rate of profits curves or frontiers , where the rate of profits are assumed to be uniform. However, these all tend to rely on data from input–output tables, where the sectoral rates of profits are not the same.…”

“…Minsky addresses the question of the potential relation between Keynesian effective demand and Sraffian schemes: 'There is a possible link between Sraffa and Keynes in which the Keynes aggregate demand is transformed into a vector of outputs, which in turn leads to gross outputs and the distribution of gross output into "inputs" and "final outputs". Such a system would not be one in which equality in the rate of profit plays any role …' (Minsky, 1990, p. 368) Recent work has attempted to link the observations embedded in national accounting and/or inputoutput tables with the theoretical results derived from Sraffian schemes, including (Han & Schefold, 2006;Mariolis & Tsoulfidis, 2016;Boglioni & Zambelli, 2017;Shaikh, 2016;Zambelli, Fredholm, & Venkatachalam, 2017;Zambelli, 2018), who make use of wage-rate of profits curves or frontiers, where the rate of profits are assumed to be uniform. However, these all tend to rely on data from inputoutput tables, where the sectoral rates of profits are not the same.…”

Government, trade and comparative advantage, revisited

“…The commonly used RCA indexes have been criticized owing to their lack of trade‐theoretical foundations (French 2017). The empirical tests of the HO model have generally been unsuccessful, as seen by Leontief's paradox (Leontief 1953) and what Trefler (1995) called the “missing trade.” Recently, using the input–output tables from the World Input–Output Database (Timmer et al 2015), Boglioni and Zambelli (2017) and Boglioni (2019) propose that the specialization patterns and resource allocations implied by the law of comparative advantage did not work well in Europe during the period from 1995 to 2011. Thus, counterexamples of the law of comparative advantage have been presented in the empirical literature.…”