Specialization and KIBS in the Euro area: a vertically integrated sector perspective

The imbalances among countries belonging to the European Monetary Union (EMU) have been analysed under several angles in recent years, but often neglecting the evolution of economic and productive structures. In this work, we aim to fill this gap analyzing the countries specialization through the differences in the inter-industrial linkages that affect economic systems competitiveness and production processes. We use the input-output subsystem approach exploiting the latest WIOD release (2018) to investigate the role of business services, with a special focus on KIBS, in shaping the EMU countries productive structures through their integration in the manufacturing sectors. The results show that disparities are growing in the composition of productive structure and they are even more pronounced when we consider intersectoral dynamics; in particular, when KIBS are addressed to satisfy the manufacturing final demand and when we control for manufacturing subsystem technological intensity.