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The paper introduces a novel indicator of technological relatedness across firms. It considers both imported inputs and exported products to assess the similarity of firms in terms of their technological capabilities in Austria. The indicator captures technological similarity more closely than measures relying solely on exported products or overlapping industry classes. Descriptive results indicate that companies that are more closely related in the import-export product space also export and import more complex products. More complex products in turn are related to higher labor productivity levels. The impact of the proposed measure for bilateral corporate coherence on the production costs of firms is assessed by firm-level quadratic cost functions. The results indicate that bilateral coherence and related spillovers have a significant negative impact on the total cost of production of firms on average. The associated cost reduction effect follows a mildly U-shaped pattern. The paper also assesses the impact of bilateral coherence on the margins of trade at the firm level. The results indicate that firms with a higher bilateral coherence, and associated spillovers, have a positive impact on the diversification of both the export portfolio and imported inputs. The impacts on intensive margins and both import and export concentration are more ambiguous.

This paper uses the supply tables underlying WIOT data to explore the provision of services by manufacturing. The service shares differ substantially across countries and sectors, while they remain largely stable over time. Findings from a latent class analysis reveal that servitization in-crease with labour productivity. The service intensities in the sectoral production mix of broadly defined manufacturing sectors are lower in countries with higher manufacturing shares. This holds for both catching-up and developed economies. Yet, servitization is largely unrelated to productivity and employment growth. We therefore argue that the degree of servitization is contingent on and an attribute of the respective economic model in which a sector operates.

We draw on trade theory to empirically explore the effects of value chain integration on producer price dynamics. Using the EU as an example of an integrated area, we construct measures of backward and forward linkages with intra‐ and extra‐EU trading partners at the country‐sector level. We find that especially upstream integration and EU accession dampen inflation. The results for downstream integration indicate a price‐increasing relationship. We propose novel EU integration indicators and offer insights to both theory and applied research. We also add to the policy debate on the price effects of (dis‐)integration of EU countries.

This paper studies how the integration into a deep Regional Trade Agreement affects sector level productivity. Using the EU as an example, we construct an integration indicator that measures integration into the Single Market relative to global value chains. The results of a simultaneous equation model show an overall positive effect of integration on labour productivity, which is driven by upstream integration. Market distortions in regional value chains accumulate downstream and negatively affect productivity. Better domestic institutions facilitate the integration process at the industry level for both Member States and Non-Member States. Then again, better institutions seem to be more favourable to the integration of industries with less complex product portfolios and lower levels of knowledge cumulativeness.