Global Value Chain and Competitiveness of V4 Economies

The paper aims to investigate the competitiveness of V4 economies from a new angle, related to fragmentation of global value chains (GVC). In the paper, a new methodology of analysing competitiveness of economies, developed by Timmer et al. (2012), was employed. Making use of World Input-Output Database, a value of GVC income of particular industries in V4 economies in 1995-2010 was calculated. Then, a thorough examination of computed values was conducted, in order to observe evolving openness, revealed comparative advantages (RCA) and position of V4 economies in the GVC. V4 economies since 1995 have become increasingly integrated in global value chains. On the one hand, they have imported more and more intermediate inputs for manufacturing industries. On the other, their contribution to GVC production have steadily increased. Although some tendencies were common for all V4 countries, some significant differences were detected as well. Firstly, level of integration into the GVC varied: Poland, probably due to size of the economy, is to a least extent dependent on participation in GVC, either by imports or by exports; while Hungary is the leader in both categories. Czech Republic, Slovakia and Hungary managed to develop RCA in capital-intensive and high-tech industries. Conversely, Poland finds it comparative advantage still predominantly in resource-based industries. Employment of a relatively new research technique sheds new light on the processes of integration of V4 into global economy. Comparison of our results with traditional ones, based on raw exports and imports data points to some important differences. So far, at least to our knowledge, no analysis like this for V4 has been performed