Central European Business Review 2023, 12(3):47-80 | DOI: 10.18267/j.cebr.326

Evolvement of Global Value Chain Positions in Central and Eastern European Countries: A New Dimension in Catching Up?

Zoltán Fülöp ORCID...1
1 Corvinus University of Budapest, Doctoral School of Business and Management, Budapest, Hungary, zoltan.fulop@uni-corvinus.hu

The paper examines the evolvements in the global value chain positions of the Central and Eastern European (CEE) countries. This approach enables us to reveal both economic and sector-level structural changes in the economic catching-up process. To study the structural patterns, we developed a modified smile curve framework that combines the value-added ratio and upstreamness index. Data were derived from the WIOD database from 2000 to 2014. By undergoing a significant catch-up in the last decades, CEE countries have shown considerably different patterns in their evolvements of GVC positions. Regarding the economy level, we concluded that leading economies can be described by a “U”-shaped smile curve over the period. There are two further dominant patterns that have become widespread among the CEE countries. Until 2014, the most common structure is marked by a “/” shape, which reflects an upstream-weak economy (e.g., BGR 2000; HUN 2000; LVA 2014). The second most common structure is marked by an inverted “U” shape (“^” shape), which denotes a manufacturing-heavy economy (e.g., EST 2000; POL 2000; HUN 2014; POL 2014). There is no significant difference in the added value ratio of the manufacturing sectors compared to the western countries.
Implications for Central European audience: Typically, the CEE countries are shifting towards supplier positions and sectors with less complex output, resulting in the flattening and twisting of the “U” shape. While most studies focus on a single sector or region, this study involves many sectors and many countries that provide a real global context, thus extending the GVC-related empirical studies concerning the CEER. To further facilitate the significant catching-up process, the upstream-weak economies should develop their structure in a way that less simple and specialised production processes are done at a high rate in any sector. Heavy manufacturing should elaborate market connections and develop connections to customers. It alerts that a transition is required from extensive to intensive and knowledge-based developments.

Keywords: global value chain; catching up; smile curve; value added ratio; upstreamness; downstreamness; CEE countries
JEL classification: F14, O11, O14, O47

Received: June 8, 2022; Revised: October 6, 2022; Accepted: October 22, 2022; Prepublished online: April 2, 2023; Published: July 19, 2023  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Fülöp, Z. (2023). Evolvement of Global Value Chain Positions in Central and Eastern European Countries: A New Dimension in Catching Up? Central European Business Review, 12(3), 47-80. doi: 10.18267/j.cebr.326
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Acemoglu, D., Antràs, P., & Helpman, E. (2007). Contracts and technology adoption. American Economic Review, 97(3), 916-943. https://doi.org/10.1257/aer.97.3.916. Go to original source...
    2. Ambroziak, Ł. (2018). The CEECs in global value chains: The role of Germany. Acta Oeconomica, 68(1), 1-29. https://doi.org/10.1556/032.2018.68.1.1. Go to original source...
    3. Antràs, P., & Helpman, E. (2004). Global sourcing. Journal of Political Economy, 112(3), 552-580. Go to original source...
    4. Antràs, P., Chor, D., Fally, T., & Hillberry, R. (2012). Measuring the Upstremness of Production and Trade Flows. American Economic Review: Papers & Proceedings, 102(3), 412-416. https://doi.org/10.1257/aer.102.3.412. Go to original source...
    5. Antràs, P., & Chor, D. (2013). Organizing the global value chain. Econometrica, 81(6), 2127-2204. https://doi.org/10.3982/ECTA10813. Go to original source...
    6. Baldwin, R., & Evenett, S. J. (2015). Value creation and trade in 21st century manufacturing. Journal of Regional Science, 55(1), 31-50. https://doi.org/10.1111/jors.12175. Go to original source...
    7. Baldwin, R. (2006). Globalisation: the great unbundling(s). Economic Council of Finland, 20, 5-47.
    8. Boda, Gy., Fülöp, Z., & Thék, R. (2021). Definition of medium income trap and international examination of its existence. MANUSCRIPT, before publication.
    9. Boda, G. (2020). Smile curve: trap or opportunity? New Labour Review, 1(2), 14-22.
    10. Bowersox, D. J., & Closs, D. J. (1996). Logistical Management: The Integrated Supply Chain Process. New York, NY, USA: McGraw-Hill Companies, ISBN: 9780071140706.
    11. Broda, C., & Weinstein, D. E. (2006). Globalization and the Gains from Variety. The Quarterly Journal of Economics, 121(2), 541-585. https://doi.org/10.1162/qjec.2006.121.2.541 Go to original source...
    12. Chor, D., Manova, K., & Yu, Z. (2014). Global production Line Position of Chinese Firms. Industrial Upgrading and Urbanization Conference, Stockholm, 28, 29.
    13. Cie¶lik, E., Biegańska, J., & ¦roda-Murawska, S. (2016). The intensification of foreign trade in post-socialist countries and their role in global value chains. Acta Oeconomica, 66(3), pp. 465-487. https://doi.org/10.1556/032.2016.66.3.5. Go to original source...
    14. Fally, T. (2011). On the Fragmentation of Production in the US. Retrieved February 22, 2017, from http://www.etsg.org/ETSG2011/Papers/Fally.pdf.
    15. Ghosh, A. (1958). Input-Output Approach in an Allocation System. Economica 25(97), 58-64. https://doi.org/10.2307/2550694. Go to original source...
    16. Hagemejer, J., & Ghodsi, M. (2017). Up or Down the Value Chain? A Comparative Analysis of the GVC Position of the Economies of the New EU Member States. Central European Economic Journal. 1(48), 19-36. https://doi.org/10.1515/ceej-2017-0003. Go to original source...
    17. Hummels, D., Ishii, J., & Yi, K. M. (2001). The nature and growth of vertical specialization in world trade. Journal of International Economics, 54(1), 75-96. https://rosap.ntl.bts.gov/view/dot/34102. Go to original source...
    18. Jones, R., & Kierzkowski, H. (1990). The role of services in production and international trade: A theoretical framework. In: Jones, R., Krueger, A. (Eds.), The Political Economy of International Trade (pp. 31-48). Oxford, UK: Basil Blackwell.
    19. Jones, R., & Kierzkowski, H. (2001). A Framework for Fragmentation. In: Arndt, S. W., Kierzkowski, H. (Eds.), Fragmentation. New Production Patterns in the World Economy (pp. 17-34). Oxford, UK: Oxford University Press. Go to original source...
    20. Koppány, K., & Kovács, N. (2011). Fundamental analysis. Győr, HUN: Széchenyi István Egyetem..
    21. Krugman P., Cooper R. N., & Srinivasan T. N. (1995). Growing World Trade: Causes and Consequences. Brookings Papers on Economic Activity, 26(1), 327-377. https://doi.org/10.2307/2534577. Go to original source...
    22. Minárik, M., Zábojník, S., & Pásztorová, J. (2022). Sources of value-added in V4 automotive GVCs: The case of transport and storage services and firm-level technology absorption. Central European Business Review, 11(4), 1-24. https://doi.org/10.18267/j.cebr.301. Go to original source...
    23. Miller, R. E., & Blair, P. D. (2009). Input-Output Analysis Foundations and Extensions. Cambridge, UK: Cambridge University Press. Go to original source...
    24. Miller, R. E., & Temurshoev, U. (2015). Output Upstreamness and Input Downstreamness in Industries/Countries in World Production. International Regional Science Review, 40(5), 443-475. https://doi.org/10.1177/0160017615608095. Go to original source...
    25. Mudambi, R. (2008). Location, control and innovation in knowledge-intensive industries. Journal of Economic Geography, 8(5), 699-725. https://doi.org/10.1093/jeg/lbn024. Go to original source...
    26. Porter, M. E. (1985). The Competitive Advantage: Creating and Sustaining Superior Performance. New York, NY, USA: Free Press.
    27. Prahalad, C. H., & Hamel, G. (1990). The Core Competence of the Corporation. Harvard Business Review, 68(3), 295-336.
    28. Rungi, A., & Del Prete, D. (2017). The 'Smile Curve': where Value is Added along Supply Chains. IMT Lucca EIC Working Paper Series, No. 428. Go to original source...
    29. Shih, S. (1992a). Empowering technology - making your life easier. Acer's Report, Acer.
    30. Shih, S. (1992b). The Smile curve of GVCs.
    31. Stöllinger, R. (2019). Testing the Smile Curve: Functional Specialisation in GVCs and Value Creation. Structural Change and Economic Dynamics, 56, 93-116. Go to original source...
    32. Sass, M. (2021). FDI-based models and what the future may have in store for them. WIIW Monthly Report, 2, 18-26.
    33. Stehrer, R. (2013). Accounting relations in bilateral value added trade (No. 101). WIIW Working paper.
    34. Sturgeon, T. J. (2008). From commodity chains to value chains: interdisciplinary theory building in an age of globalization. Industry Studies Working Paper:2008-02. Go to original source...
    35. Szalavetz, A. (2022). Transition to electric vehicles in Hungary: A devastating crisis or business as usual? Technological Forecasting & Social Change, 184, 122029. https://doi.org/10.1016/j.techfore.2022.122029 Go to original source...
    36. WIOD (2016). World Input-Output Database. Retrieved September 10, 2019, from http://www.wiod.org/home.

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content