Hidden Cooperation or Competition among Industrial Production Branches: Some Results for the Slovak Republic

The main objective of this study was to examine the “hidden” cooperative/competitive relations among the industrial production branches, which are neither technologically nor operationally interconnected. We assume the existence of two relation forms. In the cooperation form, the business, legal, tax and financial conditions positively affect the production across the industries. In the competitive relations case, the industries compete for common resources and supply their production in the same consumer market. We assume that this kind of the competition/cooperation relations among the industries define an equilibrium, which can be modeled by vector error correction model. Using the vector error correction model, we identified both the long-run and the short-run equilibrium relationships among the sales indicators and other exogenous variables. We analyzed seven industrial production branches/sectors according to Branch Statistical Classification of the Economic Activities. The selected industrial indicators involve sales, wages and number of employees across the industrial branches. The research showed that even though the industrial branches are not obviously interconnected, the statistical significant relations among them may exist. Using the Slovak monthly time series cover the time period 1998–2007, we discovered the statistically significant long-term relations among the sales indicators. Here, the industrial branches Manufacture of electrical machinery and Manufacture of radio, television and communication as well as branches Manufacture of electrical machinery and Manufacture of medical, precision and optical instruments were in the hidden long-term competitive relation and the branches Manufacture of radio, television and communication and Manufacture of medical, precision and optical instruments were in the hidden long-term cooperative relation. On the other hand, the statistically significant sales short-term relations to restore the equilibrium were also proved. The short-term relations between the sales indicators on one side and both the cross-sales lagged variables and the exogenous variables on the other side were not statistically significant.