The impact of the euro adoption on the complexity of goods in Slovenian exports
Abstract
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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