Decoupling Global Value Chains

Peter Eppinger, Gabriel Felbermayr, Oliver Krebs and Bohdan Kukharskyy

No 9079, CESifo Working Paper Series from CESifo

Abstract: Recent disruptions to global value chains (GVCs) have raised an important question: Can decoupling from GVCs increase a country’s welfare by reducing its exposure to foreign supply shocks? We use a quantitative trade model to simulate GVCs decoupling, defined as increased barriers to global input trade. After decoupling, the repercussions of foreign supply shocks are reduced on average, but some countries experience magnified effects. Across various scenarios, welfare losses from decoupling far exceed any benefits from lower shock exposure. In the U.S., a repatriation of GVCs would reduce national welfare by 2.2% but barely change U.S. exposure to foreign shocks.

Keywords: quantitative trade model; input-output linkages; global value chains; Covid-19; supply chain contagion; shock transmission (search for similar items in EconPapers)
JEL-codes: F11 F12 F14 F17 F62 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp9079.pdf (application/pdf)

Related works:
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:ces:ceswps:_9079

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().