Preliminary communication
Industry-specific Trade Patterns with Eurozone and Economic Crisis: Bosnia and Herzegovina, Croatia and Serbia
Valerija Botrić
orcid.org/0000-0001-5482-7490
; The Institute of Economics Zagreb, Zagreb, Croatia
Tanja Broz
; The Institute of Economics Zagreb, Zagreb, Croatia
Abstract
Two separate processes have recently influenced the trade relationship between European Union and countries in the Western Balkan region – different speeds of integration and consequences of global economic crisis. The ease of international trade is both the objective and consequence of economic integration process. Increase in international trade between partners within the union is expected to create through competitiveness mechanism positive preconditions for the overall Union. However, these effects are expected on average and neither for every country or every economic activity.
Since the effects of the crises have been asymmetrically spread across the European Union, we focus on the bilateral trade patterns evolvement. Specifically, we analyse trade patterns with Eurozone members in order to avoid additional discussion on the effects of exchange rate policies within the economic union. By using the intra-industry trade indicators we compare the outcomes for the three countries in the region – Bosnia and Herzegovina, Croatia and Serbia. We analyse indicators of overall intra-industry trade, vertical intra-industry trade and horizontal intra-industry trade on the 2-digit level of NACE classification in order to identify economic activities in which each of the country has established higher degree of integration. Revealing the trade patterns on the level of economic activities is important in order to enhance the discussion of competitiveness, related to the underlying smooth transition hypothesis. The hypothesis states that if intra-industry trade (i.e. the simultaneous exports and imports of similar products) has higher share in the overall trade between the countries, the integration associated adjustment costs will be less severe than in cases when the share of inter-industry trade is relatively higher. By comparing the results before and after (during) the crisis we seek to indirectly identify economic sectors dubbed as winners or losers in the analysed period. The underlying assumption is that if the economic sector has increased the share of intra-industry trade in the bilateral trade, this economic sector has managed to withstand both increased competition pressures related to integration process and suppressed demand due to the economic crisis.
Results show that most industries in analysed countries recorded low share of intra-industry trade, not many industries exhibit strong positive trends. The industries that seem to have higher degree of intra-industry trade are mostly labour-intensive. Furthermore, high share of vertical intra-industry trade indicates that in most cases the trade relationship resembles trade between economically unequal partners.
Keywords
intra-industry trade; economic activities; Bosnia and Herzegovina; Croatia; Serbia
Hrčak ID:
203897
URI
Publication date:
30.1.2017.
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