The impact of the euro adoption on the complexity of goods in Slovenian exports
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The aim of this paper is to verify the impact of the euro adoption on the complexity of goods in Slovenian exports. To the best knowledge of the authors, it is the first study on the consequences the elimination of a national currency may have for that feature of trade. According to Ricardian and Hechscher-Ohlin models of trade such a policy decision (seen as an example of trade liberalization) may lead to specialization in the production of either more or less sophisticated goods – on outcome depends on country’s technology and factor endowment. At the same time increased FDI flows may make a particular economy more engaged in international production chains with ambiguous influence on exports complexity. Given the fact that it is impossible to (a priori) theoretically predict the impact of monetary integration on the complexity, it is reasonable to search for the effects of the integration empirically. The authors used the Synthetic Control Method to compare the actual levels of exports complexity in Slovenia after the adoption of the euro with the counterfactual scenario with Slovenia not entering the Eurozone. The results indicate that the membership in the European Monetary Union (EMU) has led to temporary increase in complexity of exported goods.
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