Economic Costs of Friend-Shoring

Beata S. Javorcik, Lucas Kitzmüller, Helena Schweiger, Muhammed A. Yildirim, Beata Smarzynska Javorcik and Muhammed Ali Yildirim
Authors registered in the RePEc Author Service: Beata Smarzynska Javorcik

No 10869, CESifo Working Paper Series from CESifo

Abstract: Geo-political tensions and disruptions to global value chains have led policy makers to re-evaluate their approach to globalisation. Many countries are considering friend-shoring – trading primarily with countries sharing similar values – as a way of minimising exposure to weaponisation of trade and securing access to critical inputs. If followed through, this process has the potential to reverse global economic integration of recent decades. This paper estimates the economic costs of friend-shoring using a quantitative model incorporating inter-country inter-industry linkages. The results suggest that friend-shoring may lead to real GDP losses of up to 4.7% of GDP in some economies. Thus, although friend-shoring may provide insurance against extreme disruptions and increase the security of supply of vital inputs, it would come at a substantial cost.

Keywords: friend-shoring; regionalisation; global trade and production network; international I-O linkages (search for similar items in EconPapers)
JEL-codes: F15 F51 F60 R15 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-int and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Economic costs of friendshoring (2024)
Working Paper: Economic Costs of Friend-shoring (2022)
Working Paper: Economic costs of friend-shoring (2022)
Working Paper: Economic Costs of Friend-shoring (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10869

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