Abstract

The aim of this paper is to use a panel Granger causality test to verify the hypothesis of the existence of a causal relationship between forward linkages from domestic services to manufacturing and a country’s participation and position in GVCs in selected central and eastern European economies – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia – for the period 2000-2014. Our results show that the Baltic countries (Estonia, Lithuania, Latvia) along with the Czech Republic strengthen their positions and participation in GVCs by having a strong relationship between the financial sector and manufacturing. Poland, Hungary and Slovakia reinforce their positions and participation in GVCs by means of strong linkages between transport services and manufacturing. We also find an importance of the reverse relationship, i.e. participation in GVCs by CEE economies and the positions they occupy influence the linkages between services and manufacturing, mainly in the transport sector and in professional, scientific and technical activities. The strength of the relationship is sensitive to the linkage measure used.

Authors (2)