The Vertical Specialisation in the Information and Communication Technologies Sectors of Central and Eastern European Countries

Abstract

With globalisation, the international fragmentation of production in world trade has come to the fore, and now different production stages occur in different countries. Countries specialise at a certain stage of the production process rather than producing a final good or service. In the 2000s, the international fragmentation process of production gained more importance concomitant with the technological developments that provide low cost and the developments in Information and Communication Technologies (ICT). In this context, the study’s main purpose is to analyse the position of the ICT sub-sectors in the Central and Eastern European Countries (CEE) countries, that joined the European Union (EU) in 2004, in the global production networks. The Hummels, Ishii & Yi (HIY) method proposed by Hummels, Ishii & Yi (1998) and Hummels, Ishii & Yi (2001) was applied to appraise the vertical specialisation rate. We utilized the input-output tables for the period from 2000 to 2014 obtained from the World Input-Output Database (WIOD). The results revealed that during the period from 2000 to 2014, there was an increase in vertical specialization in the total economy of all countries, however, this trend wasn't invariably seen in the ICT sectors of every country. The outcomes revealed that the ICT sectors’ vertical specialisation rate increased in the Czech Republic, Lithuania, and Poland. However, it decreased in Estonia, Hungary, Latvia, Slovakia, and Slovenia during 2000-2014. In CEE countries, the telecommunications subsector stands as the predominant source of vertical specialization. The rise of vertical specialization in telecommunications outpaces that in other sectors.