Trade Reorientation and Restructuring towards Fast-growing Emerging Economies: Crisis Response of the EU Member States

Abstract

This paper deals with the geographical reorientation and product restructuring of trade as s a crisis-response strategy. We exploit the logic of constant market share analysis for decomposing the total change in export market shares into the contribution of the competitiveness effect and the structure effect in terms of geographical and product specialisation and apply it to the case of 2008/2009 global financial crisis (GFC) in the ‘old’ and ‘new’ EU member states. Constant market share analysis considering both gross and value-added trade data indicates lack of proactive reorientation towards the fast-growing emerging economies in either the EU-15 or the EU-10. The product structure effect played a relatively more positive role in the old EU members during the crisis, particularly on account of the mid-tech product group, but technology upgrading was more pronounced in the new EU member states.While the analysis in this paper provides lessons from 2008/2009 GFC with respect to export pattern adjustments, the Covid-19 pandemic crisis differs from the GFC mainly in that it led to major global value chain disruptions which may lead to a certain degree of domestication, diversification and regionalization of GVCs implying trade reorientation from more distant countries towards nearby ones.

Keywords

• trade structure
• trade reorientation
• crisis response
• eu
• emerging markets
• constant market share analysis