This paper studies the interplay of integration into EU value chains and industrial development measured by labour productivity.
Our integration indicator measures value chain trade within the Single Market relative to global value chain networks. Using
a simultaneous equation model, we find an overall positive effect of integration on labour productivity, which is driven by
upstream integration. Highly productive industries rather seek global value chain trade than regional integration, though.
Better domestic institutions facilitate EU integration, although they favour industries with less complex product portfolios
and lower levels of knowledge cumulativeness.
Keywords:EU integration, Value chains, Productivity, Institutions, Industrial development, Product complexity
Research group:Industrial, Innovation and International Economics
