WITH THE FINANCIAL
SUPPORT OF THE
EUROPEAN UNION
Industry Concentration and Supply Chains
in CEFTA 2006
Rainer Lanz
Private Sector Development Division, OECD
SEE IC
SARAJEVO, 25 APRIL 2012
1
Outline
1. Motivating Questions
2. Industry Concentration
3. Supply Chains
4. Conclusions and Discussion
WITH THE FINANCIAL SUPPORT
OF THE EUROPEAN UNION
2
Motivating Questions
Supply Chains
Industry Concentration
• How
is
manufacturing
distributed over space in
CEFTA?
•What is the size and hence
importance
of
different
manufacturing industries?
• Relative Concentration: How
are industries distributed over
space
compared
to
manufacturing?
What are the most important
supply
chains
in
CEFTA
economies?
What is the position of CEFTA
economies in supply chains?
How important are intra-CEFTA
versus
extra-CEFTA supply
chains?
Next Generation RCI
Sector Competitiveness
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Trans-national Clusters
Regional Supply Chains
3
Industry Concentration
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OF THE EUROPEAN UNION
4
How is manufacturing distributed over space in
CEFTA?
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OF THE EUROPEAN UNION
5
Manufacturing Concentration in CEFTA Economies
Serbia and Croatia account for 73% of turnover and 58% of
employment in CEFTA
Manufacturing in CEFTA – Turnover: 42.5 bn EUR – Employment: 1.07 m
4% 3%
Shares of CEFTA Parties:
1% 1%
(by turnover)
Albania
1.2 bn
BIH
4.2 bn
Croatia
14.0 bn
Kosovo *
0.6 bn
fYR Macedonia 3.6 bn
Moldova
1.5 bn
Montenegro
0.6 bn
Serbia
16.8 bn
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Serbia
Croatia
8%
39%
BIH
FYR Macedonia
10%
Moldova
Albania
Montenegro
33%
Kosovo*
6
Manufacturing Concentration in CEFTA: Map
Absolute concentration of manufacturing in CEFTA (based on turnover)
0.25-0.5%
0.25-0.5%
0.5-1%
0.5-1%
1-2%
1-2%
2-3%
2-3%
3-4%
3-4%
4-5%
4-5%
+5%
+5%
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7
Manufacturing Concentration in CEFTA: Top 10 Regions
The top 10 regions in CEFTA concentrate 43% of turnover and 27% of
employment.
Top Regions of Manufacturing Agglomeration (by turnover, EUR)
Belgrade
Zagreb (city)
South Backa
Skopje
Primorje-Gorski Kotar
Sisak-Moslavina
Zenicko-Dobojski
Podunavlje
Istria
Zagreb (county)
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SRB
HRV
SRB
MKD
HRV
HRV
BIH
SRB
HRV
HRV
4.6 bn
2.9 bn
2.0 bn
1.8 bn
1.7 bn
1.3 bn
1.0 bn
1.0 bn
1.0 bn
1.0 bn
8
What is the size and hence importance of different
manufacturing industries?
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9
Industry Specialisation of CEFTA 2006: Top 5 Industries
The low tech food and beverages industry is the leading manufacturing
sector in CEFTA, with the basic metals industry a distant second.
Top Manufacturing Industries (by turnover, EUR)
15
Food and Beverages
Low Tech
11.8 bn
28%
Belgrade (SRB), South Backa (SRB),
Zagreb – city (HRV)
27
Basic metals
Medium
Low Tech
3.5 bn
8%
Podunavlje (SRB), Skopje (MKD),
Hercegovacko-Neretvanski (BIH)
28
Fabricated metal
products
Medium
Low Tech
3.4 bn
8%
Zenicko-Dobojski (BIH), Belgrade (SRB),
Hercegovacko-Neretvanski (BIH)
24
Chemical Products
Medium
High Tech
3.4 bn
8%
South Banat (SRB), Zagreb – city (HRV),
Belgrade (SRB)
23
Petroleum Products
Medium
Low Tech
2.8 bn
7%
Primorje-Gorski Kotar (HRV), SisakMoslavina (HRV), Skopje (MKD)
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10
Relative Concentration: How are industries
distributed over space compared to
manufacturing?
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11
Relative Concentration of Manufacturing Industries in CEFTA
Theil Index of Concentration for Turnover
Tobacco products
Coke, refined petroleum product
Other transport equipment
Basic metals
Motor vehicles, trailers
ICT
Leather and leather products
Textiles
Top
6
industries
Wood and wood products which are the most
concentrated
relative
Electrical
machinery
n.e.c. to overall manufacturing
Wearing apparel
Chemicals and chemical products
Pulp, paper and paper products
Publishing and printing
Oth.non-metallic mineral products
Rubber
and plastic
products
Food
products
is the
largest industry in CEFTA and is therefore not
Furniture and other manufacturing
surprisingly concentrated in a similar way than manufacturing
Fabricated metal products
Machinery and equipment n.e.c.
FoodWITH
products
and beverages
THE FINANCIAL SUPPORT
12
OF THE EUROPEAN UNION
0.0
0.5
1.0
1.5
2.0
Within or between country concentration?
within countries
Tobacco products
Coke, refined petroleum product
Other transport equipment
Basic metals
Motor vehicles, trailers
ICT
Leather and leather products
Textiles
Wood and wood products
Electrical machinery n.e.c.
Wearing apparel
Chemicals and chemical products
Pulp, paper and paper products
Publishing and printing
Oth.non-metallic mineral products
Rubber and plastic products
Furniture and other manufacturing
Fabricated metal products
Machinery and equipment n.e.c.
FoodWITH
products
and beverages
THE FINANCIAL SUPPORT
between countries
98%
69%
2%
31%
58%
42%
78%
22%
72%
28%
66%
34%
71%
29%
93%
7%
70%
30%
93%
7%
73%
27%
86%
14%
Differences in the distribution of turnover
94%
6%
between single industries and overall
83%
17%
76%
24%
manufacturing are mainly observed within
91%
9%
countries rather than between countries.
96%
4%
73% 27%
85%
15%
81% 19%
13
OF THE EUROPEAN UNION
0.0
0.5
1.0
1.5
2.0
Supply Chains
WITH THE FINANCIAL SUPPORT
OF THE EUROPEAN UNION
14
What are the most important supply chains in
CEFTA economies?
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15
CEFTA Exports of Manufacturing Industries (2009)
CEFTA Exports (in 1000 EUR)
Textiles, Leather and Footwear
Food products, Beverages and Tobacco
Basic Metals
Chemicals and Chemical Products
Machinery and Equipment, n.e.c
Electrical Machinery and Apparatus n.e.c
Fabricated Metal Products
Coke, Refined Petroleum Products
Other Transport Equipment
Manufacturing n.e.c; Recycling
Rubber and Plastics Products
ICT
Other Non-Metallic Mineral Products
Wood and Products of Wood and Cork
Pulp, Paper, Printing and Publishing
Motor Vehicles, Trailers and Semi-Trailers
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OF THE EUROPEAN UNION
Top 3 Exporting Industries:
1. Textiles
2. Food Products
3. Basic Metals
0
500,000
1,000,000 1,500,000 2,000,000 162,500,000
CEFTA Exports: Intermediate and Final Goods
Final Goods
Textiles, Leather and Footwear
Food products, Beverages and Tobacco
Basic Metals
Chemicals and Chemical Products
Machinery and Equipment, n.e.c
Electrical Machinery and Apparatus n.e.c
Fabricated Metal Products
Coke, Refined Petroleum Products
Other Transport Equipment
Manufacturing n.e.c; Recycling
Rubber and Plastics Products
ICT
Other Non-Metallic Mineral Products
Wood and Products of Wood and Cork
Pulp, Paper, Printing and Publishing
Motor Vehicles, Trailers and Semi-Trailers
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OF THE EUROPEAN UNION
Intermediates
Top 3 Exporting Industries for Intermediates (Value):
1. Basic Metals
2. Chemical Products
3. Coke and Petroleum Products
0
500,000
1,000,000 1,500,000 2,000,000 2,500,000
What is the position of CEFTA countries in supply
chains?
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18
Supply Chains and Revealed Comparative Advantage
Revealed comparative advantage (RCA) captures relative trade
specialisation dividing an industry market share by the manufacturing
market share for exports (or imports):
RCAX c ,k
 X c ,k 


X

World
,
k

 
 X c , Manuf 


X

 World , Manuf 
Market share of country c in world
exports in industry k
Market share of country c in world
exports in manufacturing
An RCA higher than 1 implies that country c has a RCA in industry k.
 For example, CEFTA has a RCA in exports of intermediate food products,
if its share in world exports is greater in intermediate food products than
in overall manufacturing.
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19
What is a Country’s Position in Supply Chains?
No RCA in imports of
intermediates but RCA in
exports of final goods
RCA in imports of
intermediates and in exports
of intermediate goods
RCA in imports of
intermediates and in
exports of final goods
Intermediate Stage
First Stage
Final Stage
Low Tech Industries
BIH
MKD
MNE
SRB
Food, Beverages
and Tobacco
Textiles, Leather
and Footwear
Wood and
Products of Wood
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MKD
MDA
HRV
Intermediate Stage
First Stage
Final Stage
MKD
Intermediate Stage
First Stage
BIH
First Stage
HRV
MNE
Intermediate Stage
MDA
ALB
HRV
MDA
BIH
MKD
SRB
Final Stage
SRB
ALB
BIH
Final Stage
20
Examples of Potential Intra-Industry Supply Chains
Pulp, Paper, Printing
and Publishing
ALB
BIH
HRV
SRB
Intermediate Stage
First Stage
BIH
SRB
Final Stage
Medium-Low Tech Industries:
Basic Metal
Products
BIH
MNE
ALB
MKD
SRB
Intermediate Stage
First Stage
Final Stage
SRB
Fabricated
Metal Products
ALB
First Stage
BIH
HRV
MKD
Intermediate Stage
MDA
SRB
Final Stage
Medium-High Tech Industries and ICT:
BIH
Motor Vehicles
First Stage
Intermediate Stage
Final Stage
First Stage
Intermediate Stage
Final Stage21
Other Transport
Equipment
Chemicals and
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chemicalOF products
THE EUROPEAN UNION
ICT
How important are intra-CEFTA versus extra-CEFTA
supply chains?
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OF THE EUROPEAN UNION
22
CEFTA Manufacturing Exports (2009)
CEFTA Exports (in 1000 EUR)
Textiles, Leather and Footwear
Food products, Beverages and Tobacco
Basic Metals
Chemicals and Chemical Products
Machinery and Equipment, n.e.c
Electrical Machinery and Apparatus n.e.c
Fabricated Metal Products
Coke, Refined Petroleum Products
Other Transport Equipment
Manufacturing n.e.c; Recycling
Rubber and Plastics Products
ICT
Other Non-Metallic Mineral Products
Wood and Products of Wood and Cork
Pulp, Paper, Printing and Publishing
Motor Vehicles, Trailers and Semi-Trailers
WITH THE FINANCIAL SUPPORT
OF THE EUROPEAN UNION
0
500,000
1,000,000 1,500,000 2,000,000 232,500,000
CEFTA Exports: Intra- vs. Extra-CEFTA
Extra-CEFTA
Textiles, Leather and Footwear
Food products, Beverages and Tobacco
Basic Metals
Chemicals and Chemical Products
Machinery and Equipment, n.e.c
Electrical Machinery and Apparatus n.e.c
Fabricated Metal Products
Coke, Refined Petroleum Products
Other Transport Equipment
Manufacturing n.e.c; Recycling
Rubber and Plastics Products
ICT
Other Non-Metallic Mineral Products
Wood and Products of Wood and Cork
Pulp, Paper, Printing and Publishing
Motor Vehicles, Trailers and Semi-Trailers
WITH THE FINANCIAL SUPPORT
OF THE EUROPEAN UNION
Intra-CEFTA
Overall Shares for Manufacturing Exports:
Intra-CEFTA: 28%
Extra-CEFTA: 72%
0
500,000
1,000,000 1,500,000 2,000,000 242,500,000
CEFTA Exports of Intermediates: Intra- vs. Extra CEFTA Shares
Intra-CEFTA
Extra-CEFTA
Textiles, Leather and Footwear
13
Food products, Beverages and Tobacco
47
Basic Metals
27
Chemicals and Chemical Products
32
Machinery and Equipment, n.e.c
16
Electrical Machinery and Apparatus n.e.c
18
Fabricated Metal Products
31
Coke, Refined Petroleum Products
51
Other Transport Equipment
6
Manufacturing n.e.c; Recycling 2
Rubber and Plastics Products
31
ICT
10
Other Non-Metallic Mineral Products
54
Wood and Products of Wood and Cork
26
Pulp, Paper, Printing and Publishing
34
Motor Vehicles, Trailers and Semi-Trailers
9
0%
53
73
68
84
82
69
49
94
98
69
90
46
74
66
91
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Overall Shares for Manufacturing Exports of Intermediates:
Intra-CEFTA: 29%
Extra-CEFTA: 71%
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87
Conclusions
How is manufacturing distributed over space in CEFTA?
• Manufacturing activity is highly agglomerated, i.e. the top 10
regions (out of 102) in CEFTA concentrate 40% of the
manufacturing activity
What is the size and hence importance of different
manufacturing industries?
• Low and medium-low tech industries account for about 80%
of manufacturing activity, e.g. Food and beverages account for
28% of manufacturing turnover
Relative Concentration: How are industries distributed over
space compared to manufacturing?
• Industry concentration occurs mainly within countries rather
than between countries
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26
Conclusions
What are the most important supply chains in CEFTA
economies?
• Medium-low tech industries, i.e. basic metals
What is the position of CEFTA economies in supply chains?
• Entire supply chain: Food products as well as Basic metals
(first and intermediate stage) and fabricated metal products
(intermediate and final stage)
• Intermediate and final stage: Textiles, Wood products and
cork, Paper and publishing
• No specialisation in medium-high tech industries and ICT
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27
Conclusions
How important are intra-CEFTA versus extra-CEFTA supply
chains?
• Extra-CEFTA exports dominate accounting for 71% of
intermediate exports
• For Food products, beverages and tobacco, intra- and extraCEFTA supply chains are of similar importance
• For Basic metals and Fabricated metal products, intra-CEFTA
supply chains account close to one third of intermediate exports
• For Paper products and publishing, and Wood products and
cork, intra-CEFTA supply chains account for 26% and 34% of
intermediate exports.
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Thoughts for Discussion
• Common interests and scope for cooperation of regional
working groups will vary by sector
• Not to forget: Importance of inter-industry linkages and
supply chains
• Services are often significant inputs for manufacturing
production and hence crucial for sector competitiveness
• Is extra-CEFTA trade of higher quality than intra-CEFTA
trade? Where is more value added incorporated?
• Where do SEE countries have the potential to “move up the
value chain”? Between sectors or along stages or functions
within a given sector?
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29
Thank you for your attention!
Rainer.Lanz@oecd.org
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