Linkages between services and manufacturing as a new channel for GVC development: Evidence from CEE countries.

• Links between services and manufacturing help development of GVCs for CEE countries • The Baltics and the Czech Republic rely on financial services-manufacturing links • GVCs in Poland, Hungary, and Slovakia base on transport services-manufacturing links • The opposite relationship is also found: GVC development creates more intensive links. The goal of the paper is to verify a causal relationship between forward linkages from domestic services to manufacturing and the participation/position of a country in global value chains (GVCs) in selected Central and Eastern European economies. We observed a strong polarisation pattern: the Baltic countries along with the Czech Republic strengthen their positions and participation in GVCs by having a strong relationship between the financial sector and manufacturing, while Poland, Hungary, and Slovakia have solid linkages between transportation services and manufacturing. We also discover that the reverse relationship is significant. [ABSTRACT FROM AUTHOR]