Olga Ivanova (p)

Eduardo Hernández-Rodríguez

Current paper develops an innovative modelling approach by combining qualitative story lines and econometric estimations of sectoral productivity with the EU-EMS SCGE model. EU-EMS model is the global economic model that has explicit representation of 12 Dutch provinces including their supply, demand and trade flows. The developed methodology is used for the quantification of long-term high and low growth scenarios for Dutch provinces in the period 2024-2060. Development of regional-economic scenarios starts with creation of qualitative story lines that capture main drivers of structural change and trade specialization in the Netherlands and the rest of the world. These drivers include sector-specific technological change, development of trade barriers and trade blocks over time, demographic changes and supply of labour by skill type as well as the development of households consumption patterns and governmental spending. Panel-data econometric analysis with EU-KLEMS database is used in order to translate the story lines into sector-specific long-term technological change that is measured as the Total Factor Productivity (TFP). For the rest of the scenario elements, the story lines are translated into model parameter changes using observed historical patterns in different sectors and countries of the world. The outcomes of EU-EMS model for low and high-growth scenario’s and their effects of regional distribution of incomes and sectoral production are analyzed using geographical maps.

Martina Pardy (p), Eduardo H. Rodriguez

This study analyses the link between global value chain participation and intra-regional income inequality across European regions from 2003 to 2010. It combines regional input-output data to construct different indicators of global value chain participation and income data for regions at NUTS-2 level. We show that two measures, forward and total participation, are positively linked with income inequality at the top. Backward participation, in contrast, is not significantly associated with income inequality at the top. This effect varies by development level, showing that it is more pronounced for less developed regions. We show that the effects are not driven by the economic and financial crisis as the results hold and even increase largely in size, when excluding the years 2008-2010.

Eduardo Hernández-Rodríguez (p)

Martina Pardy

Regions in the EU are trying to develop new value chains and/or to upgrade the existing ones. Based on relatedness and economic complexity metrics, this paper studies how interregional value chains linkages can influence the chances of regions to diversify into new production functions along and across value chains.

Previous work has shown that local capabilities and the relatedness between production functions are important drivers explaining the evolution of both functional upgrading and downgrading in global value chains. Based on a database containing information on value added content of gross exports and labour structures for 199 EU NUTS-2 regions between the years 2000-2010, the relatedness between production functions in global value chains is found to be a crucial factor explaining both functional upgrading and downgrading.

Built upon this framework, this paper includes, and add, the role of interregional linkages in terms of trade in value added to unlock new production functions in the region. It exploits the idea of complementary interregional linkages to explore how being connected to other regions specialised in specific related production functions in the value chains may impact the probability of regions to diversify along and across global value chains.

The exploitation of interregional linkages still remains a challenge for EU regional policies since regions don’t always collaborate to the desirable extend. The findings of this paper may have large policy implications for the better understanding of interregional global value chains linkages and structural regional change.