Norbert Szabó (p)

Erik Braun

Contrary to what is a common practice in the evaluation of traditional cohesion policy instruments (e.g., R&D, human capital or infrastructure investment subsidies) economic impact modelling has not yet found its place in the evaluation of smart specialisation strategies. Though the necessity of economic impact assessment is emphasized in the theoretical contributions of the smart specialisation literature (e.g., Foray 2015) the practical methodology is still an open issue. In this paper, we study the local and national impacts of alternative smart specialisation paths for Pécs, a Hungarian city-region. We follow the steps in specialisation suggested by the smart specialisation literature (Foray et al., 2021). Accordingly, we start with the analysis of the novelty of discoveries followed by the assessment of their embeddedness in the economic structure of the region, their spillover potential, and the likely economic impacts. The comparison of alternative development paths for different transformative activities will lead us to draft some initial policy suggestions.
(See extended abstract.)

Eduardo Hernández Rodríguez (p), Ron Boschma, Andrea Morrison, Xianjia Ye

Norbert Szabó

This paper examines the evolution of functional upgrading GVCs processes for EU regions (NUTS2) during the period 2000-2010. It relies upon a new dataset combining information on value added, occupations and wages. Value added information is retrieved from the interregional input-output table “EUREGIO”. For information on occupations and wages, microdata from the EU Labour Force Survey and the EU Structure of Earnings Survey is used, respectively.

Within each regional industry, four different business functions are distinguished: R&D, management, marketing, and production. Firstly, the functional GVC specialisation of each regional industry is measured based on the contribution of each business function in the production of value added across GVCs (revealed comparative advantage). For this purpose, information on the number of workers developing specific occupations and their wages are matched with business functions. Secondly, based on this functional GVCs specialisation indexes, the relatedness density between them is computed following the method of co-occurrence. We then try to explain functional upgrading GVCs phenomena, as acquiring functional specialisation in new business functions, based on the relatedness to previous functional specialisation patterns. It is important to notice that three different kinds of functional upgrading GVCs processes are studied: intra-sectoral, inter-sectoral and deepening in already existing functional specialisations.

Expected results include the validation of the so-called “Principle of Relatedness”. It is expected that regions become specialised in functions that are close to those in which they already have a relative comparative advantage. Unrelated functional upgrading GVCs processes are expected to be exceptional.

* See extended abstract as well.

Tibor Kiss, Tamás Sebestyén, Erik Braun (p)

Eduardo Hernández Rodríguez

The debate about the role and effects of international trade has begun to intensify recently. On the one hand, we know that specialization and participation in the international division of labor results in more efficient production structures that bring welfare gains. On the other hand, the resulting strong interconnectedness of countries allows for rapid spread of shocks and a more volatile and vulnerable system. Overall, neither full self-sufficiency nor an extremely globalized production structure seems to be sustainable nowadays. However, the responsiveness of countries to shocks might depend on the resilience of the countries. A system’s (economy’s) level of resilience derives from two structural properties: redundancy and efficiency. An efficient system has only a few mutual relationships, which indicates strong specialized trade flows and corresponds to highly globalized production processes of a country. In contrast, a redundant system has many more similarly weak connections signaling a less specialized and embedded position of elements within the system, corresponding to a lower level of involvement within the international division of labor. While it is clear that extreme efficiency and extreme redundancy are not optimal arrangements, finding the optimal combination in between is challenging. Putting this framework of system resilience into international trade and production networks, may indicate the optimal trade-off between self-sufficiency (more redundant systems) and specialization within international trade (more efficient systems). In this paper we use methods from Ecological Network Analysis (ENA) to capture the countries' structural resilience building on sector level input-output data. The cross-country analysis shows that countries are heterogeneous in terms of resilience, and the structure of the countries has become more effective and globalized between 2000 and 2014. Using econometric tools, we find a strong and significant association between redundancy/efficiency and the level of international trade, confirming the use of the complex system perspective in international trade. Finally, we also examine the countries' level of self-organization and the window of vitality in terms of resilience.