Inputs in distress: geoeconomic fragmentation and firms’ sourcing

Ludovic Panon, Laura Lebastard, Michele Mancini, Alessandro Borin, Dennis Essers, Andrea Linarello, Peonare Caka, Gianmarco Cariola, Elena Gentili, Tullia Padellini, Francisco Requena Silvente and Jacopo Timini

No 2992, Working Paper Series from European Central Bank

Abstract: We study how disruptions to the supply of foreign critical inputs (FCIs) —that is, inputs primarily sourced from extra-EU countries with highly concentrated supply, advanced technology products, or which are key to the green transition —might affect value added at different levels of aggregation. Using firm-level customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how much geoeconomic fragmentation might affect European economies differently. Our baseline calibration suggests that a 50% reduction in imports of FCIs from China and other countries with similar geopolitical orientations would result in sizable losses of value added with significant heterogeneity across firms, sectors, regions and countries, driven by the heterogeneous exposure of firms. Our findings show that the short-term costs of supply disruptions of FCIs can be substantial, especially if firms cannot easily switch away from these inputs. JEL Classification: F10, F14, F50, F60

Keywords: geoeconomic fragmentation; global sourcing; global value chains; imported inputs; international trade (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2992~ccb9cb4a80.en.pdf (application/pdf)

Related works:
Working Paper: Inputs in Distress: Geoeconomic Fragmentation and Firms’ Sourcing (2024)
Working Paper: Inputs in distress: geoeconomic fragmentation and firms' sourcing (2024)
Working Paper: Inputs in distress: Geoeconomic fragmentation and firms' sourcing (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20242992

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().