Structural changes of the Slovak economy
Structural changes of the Slovak economy

Author(s): Júlia Ďurčová, Dominika Oravcov
Subject(s): Economy, Supranational / Global Economy, Business Economy / Management
Published by: ASERS Publishing
Keywords: global value chains; export; input-output analysis; multipliers; value added;
Summary/Abstract: Due to international fragmentation of production in world economy we observe changes in international competitiveness. Intention of countries to participate in new international division of labor based on participation of country in the global value chains reveals lot of opened questions. Understanding effects of exports for domestic production as well as value added creation and employment can provide important development policy insights. Since the differences between gross exports and value added in exports are already considerable and growing, assessing the competitiveness of economies through traditional indicators based on gross export statistics is becoming increasingly less relevant. In order to examine structural and intra-industrial linkages we implement input-output analysis that is based on the use of input-output tables that provide crucial information on value added within individual segments. The results indicate that Slovak industries are strongly linking to foreign demand. Almost all value added of top Slovak exporting sectors is generated by foreign demand. This confirms the high risk of vulnerability to external shocks. The results prove that production multiplier over analysed period decreases, the most in exporting sectors. As expected, the exporting sectors generated lower product multiplication effect for Slovak economy. The sectors with dominant services share multiply more value added by unit of production compared to manufacturing exporting sectors. Moreover, the multiplier of value added for example for construction sector rises. However, the exporting sectors still lagged and their effect on domestic value added is even weakening.

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