The Involvement of Slovakia in Intermediate Trade

Abstract

Fragmentation of production processes across borders represents a new paradigm of foreign trade. The new organization of production processes at the global or regional level opposite to a national level has been manifested by huge increase of trade in intermediate inputs. The world trade is growing fast and is largely driven by the intermediate trade. Countries that do not significantly engage in intermediate trade and achieve low labour productivity growth rates, have seen lower growth rates of value added. Therefore, the aim of this article is to investigate the involvement of Slovakia in use and trade in intermediates. We analyze the import and export of intermediates using data from world input-output database. The results for Slovakia show that the trade in intermediates has experienced a significant shift over last 14 years. The volume of intermediate trade remarkably grown moreover the dynamic of its change overcomes the growth of gross output as well as value added. At the same time, the Slovak industrial sectors have increased demand for imported intermediate inputs; furthermore the difference between imported and exported intermediate inputs rises.