European imbalances and shifts of global value chains to the Central European periphery: role of institutions

Abstract

This article deals with the topic of European imbalances. They are defined as large and persistent differences in the current account position of European countries, which are closely connected to the emergence of the financial crisis and the subsequent sovereign debt crisis in 2008. A build-up in current account deficits had been observed from the mid-1990s, namely in two peripheral regions of the EU. However, little attention was paid to the potential differences between the Southern and Central European peripheries of the EU. The emergence of large and persistent current account deficits in Southern Europe was accompanied by a significant shift in gains from global value chains. The aim of this paper is to evaluate the factors that co-determined the changes in the geographic structure of GVCs in Europe. These changes decreased GVC income in Southern Europe, increased it in Central Europe and contributed to the build-up of account imbalances in Southern Europe. Despite the fact that Central Europe was among the deficit regions in European imbalances, the four Central European countries substantially increased their gains from global value chains as well as GVC participation. The shift in GVC activity towards Central Europe between 1995 and 2011 was driven not only by total labour costs but also by better regulatory quality. At the same time, TNCs switching from Southern to Central Europe had to accept worse quality contract enforcement.

The Impact of Industry 4.0 on Jobs Creation within the Small and Medium-Sized Enterprises and Family Businesses in Slovakia

“…Lipkova and Hovorkova (2018) agree that it will be a system with decentralized management and autonomous decision-making-an intelligent factory will be created; which experts refer to as the cyber-physical system. Hnat and Sankot (2019) assert that these changes will fundamentally affect the life of human society, therefore it is necessary to expect changes in all areas of a society. On one hand, according to technological pessimists, the critical benefits of the digital revolution have already been achieved, so the effects on productivity are almost exhausted (Sadilek and Zadrazilova 2016).…”

Spatial Patterns of Knowledge-Intensive Business Services in Cities of Various Sizes, Morphologies and Economies

“…Following this logic, KIBS companies in Brno and Ostrava should be more concentrated in the inner city or even the urban core (despite Ostrava's polycentricity), because low urbanization economies do not create favorable conditions for secondary city centers to develop and land rents in the inner city are less prohibitive than in Prague (see Boix et al [30] for detailed theoretical argumentation). Nevertheless, in Brno and especially in Ostrava [18] the share of companies in KIBS that focus on relatively low-skilled and routine tasks (and on production rather than on development phase in the value chain: See also Stachowiak and Stryjakiewicz [89] for interesting discussion of spatial distribution of value chains in creative industries or Hnát and Sankot [90] for the role of institutional framework) significantly higher than in the capital city. For these companies, urbanization and localization economies related to the presence in the city center may not be sufficient to counterbalance the high rents and other costs-therefore, more spatially dispersed localization patterns may theoretically occur.…”

Dynamics of GVC Position of v4 Automotive Suppliers: Implications for Public Policy

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