EUROPE’S ECONOMIC LANDSCAPE FROM THE PERSPECTIVE OF TRADE FLOWS AND NET FOREIGN ASSETS POSITIONS

Abstract

Globalisation has been characterised by the emergence of huge imbalances worldwide.
Countries have become highly asymmetrical in terms of trade balances and net foreign assets
positions as a result of a process of production relocation of unprecedented proportions. The
stability itself of Europe’s trade position is the result of diverging trajectories for the group of
net importing and exporting countries and similar growing disparities can be found analysing
cross-country assets holdings. In the paper four main country profiles within Europe are
identified: heavily indebted countries with increasing deficits in merchandise trade but
growing net FDI positions and net exports in royalties and license fees, like the United
Kingdom; rising manufacturing exporters with a positive net FDI position; a periphery of FDI
recipients with an improving trade balance, and finally countries, like the Mediterranean ones,
that are both net capital and goods importers.