Global Value Chains and Subnational Exposure to Geopolitical Tensions

Giorgia Giovannetti, Luca Lodi and Enrico Marvasi

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: Geopolitical tensions are reshaping Global Value Chains (GVCs), yet little is known about the magnitude of these effects and, especially, how they translate into uneven exposures at the subnational level. This paper argues that subnational regions are a critical unit for understanding GVCs and their changes under geopolitical fragmentation. We develop a regional exposure index that links global sensitivities from structural gravity estimations of GVC-related trade with granular regional trade data. Evidence from Italian regions reveals pronounced heterogeneity in both upstream and downstream exposure, depending on sectoral specialization and partner composition. These findings suggest that geopolitical fragmentation not only reshapes GVCs but also reconfigures regional economic vulnerabilities, with direct implications for cohesion, competitiveness, and policy design.

Keywords: Global Value Chains; Regional Development; Gravity; Geopolitical tensions; Trade policy. (search for similar items in EconPapers)
JEL-codes: F14 F23 F51 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2026
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