Factors of Foreign Trade Resilience of European Countries in the Context of Global Competition: the Role of Intra-industry Trade

The article dwells onto the identification and quantitative assessment of the factors of the European countries’ bilateral trade resilience. The factors were studied separately for two groups, namely those responsible for maintaining of trade linkages and those characterising their ability to recover after external shocks. The paper covers only the first group of factors that were furtherly split onto inherent (endogenous) and acquired (exogenous). The inherent factors include geographical proximity and historical linkages, whereas acquired factors consist of bilateral trade intensity and degree of intra-industry trade between a pair of countries. Identifying factors that ensure resistance to foreign trade shocks using the example of relations within Europe is useful because from a historical and geographical point of view, this region is an example of the deep development of trade relations. Therefore, the identified factors will be significant for conducting research in the case of other countries. The indicators allowing for the factors’ assessment are calculated for the European states, except Turkey, Russia and several microstates. The conclusion is drawn that it is only degree of intra-industry trade that is responsible for preserving bilateral trade flows during crises. The results obtained suggest that upgrading intra-industry trade through participation in global value chains is necessary for trade resilience. This takeaway is critical for the foreign trade and industrial policies’ recalibration both in Europe and other regions, such as Africa and the Middle East.

Resilience, factors of resilience, Europe, foreign trade, intra-industry trade, global value chains