Lecture 3

• Sectoral Structure of Value Added in the EU (2000-2020)


  Services: Increased from 69.2% to 73.1%. Industry: Decreased from 22.6% to 19.5%. Agriculture, Forestry, and Fishing: Dropped from 2.5% to 1.8%. Construction: Slight decrease from 5.7% to 5.5%.
• Sectoral Structure of Value Added in the EU (2021)


  Services: Decreased to 72.4%, with the highest shares in Luxembourg (87.2%), Cyprus, and Malta. Industrial Economy: Highest share in Ireland (41.2%) and Czechia (28.6%). Construction and Agriculture: Highest contributions in Romania.
• Sectoral Structure in Terms of Employment in the EU (2000-2020)


  Services: Employment increased from 64.6% to 73.2%.
• Size Class Classification of Firms

  Micro Firms: Less than 10 employees. Small Firms: 10 to 49 employees. Medium-sized Firms: 50 to 249 employees. Large Firms: 250 or more employees.
• Basic Components of Balance of Payments

  Current Account: Goods and services, primary income, secondary income. Capital Account. Financial Account: Financial derivatives, other investments, reserve assets.
• Interpretation of Balances


  Current + Capital Account Balance: Net lending (+) / Net borrowing (-). Financial Account Balance: Difference between net acquisition of financial assets and net incurrence of liabilities. Errors and Omissions: Compensate deviations between real and financial transactions.
• International Trade in Goods with Non-Member Countries (2002-2021)

  In 2021, the EU exported goods worth €2,181 billion, resulting in a trade surplus of €62 billion. Top export markets: US, UK, China. Top import origins: China, US, Russia.
• International Trade in Goods with Member States

  In 2021, 61.2% of EU trade was intra-EU. Highest intra-EU trade shares in Luxembourg (85.8%), Slovakia, and Czechia.
• Foreign Direct Investment (FDI) Flows

  FDI data covers investment positions, flows, and income by countries.
• Real Effective Exchange Rates and Competitiveness Indicators

  Harmonised Competitiveness Indicators: Based on consumer price indices, GDP deflators, and unit labour cost indices. Trade Weights: Used to assess competitiveness.
• Relative Specialisation Index (RSI)


  $RSI_{i,j} =$$\frac{\left(\frac{GVA_{i,j}}{GVA_j}\right)}{\left(\frac{GVA_{i,EU}}{GVA_{EU}}\right)}$
• $RSI_i,_j>1$


  Region j is specialised in sector i
• $RSI_i,_j\approx1$


  Similar specialisation to the EU average
• $RSI_i,_j<1$


  Below average specialisation in sector i
• Economic activities are distributed across regions due to various factors like natural resource endowments, weather, location, landscape, client mass, and skilled labour supply. Regional employment specialization is analysed by comparing a region’s employment share in a specific sector to the EU average.