The Central European Manufacturing Core: What is Driving Regional Production Sharing?

Client/Funding Institution

Austrian Ministry of Economy, Family and Youth


There is evidence that Europe’s manufacturing activity is increasingly concentrated in a Central European (CE) Core which the IMF in a recent publication also refers to as the German-Central European supply chain. This CE Manufacturing Core is centred on Germany and comprises Austria as well as the four Visegrád countries. In this study we provide further empirical evidence concerning this CE Manufacturing Core and explore in detail the structure and development of the regional supply chains at the industry level over the period 1995-2011. This will shed light on which industries build the backbone of this regional manufacturing cluster. We will further investigate which of the potential factors (such as FDI, the wage level, availability of industrial workers, R&D capacity etc.) are related to the intensification of vertical specialisation. Throughout the analysis our primary interest is the role of Austria in the Central European Manufacturing Core. The case of Austria is particularly interesting because it is neither the primary technology leader within the country group, nor is it an offshoring destination and therefore takes an intermediate position. For this reason we also examine in-depth how Austria’s revealed comparative advantages in the manufacturing sector have developed over time and whether structural change in the Austrian manufacturing sector can be related to vertical specialisation and participation in the CE Manufacturing Core.


October 2013 - June 2014

wiiw team Leader

Roman Stöllinger

Keywords: foreign direct investment, international trade, Industrial Organisation, manufacturing

Countries covered: Austria, Czechia, Hungary, Poland, Slovakia

Research Areas: International Trade, Competitiveness and FDI, Sectoral studies