Inputs in Distress: Geoeconomic Fragmentation and Firms’ Sourcing

Alessandro Borin, Peonare Caka, Gianmarco Cariola, Dennis Essers, Elena Gentili, Laura Lebastard, Andrea Linarello, Michele Mancini, Tullia Padellini, Ludovic Panon, Francisco Requena and Jacopo Timini
Additional contact information
Alessandro Borin: Bank of Italy
Peonare Caka: Bank of Slovenia
Gianmarco Cariola: Bank of Italy
Dennis Essers: National Bank of Belgium
Elena Gentili: Bank of Italy
Laura Lebastard: Bank of Italy
Michele Mancini: Bank of Italy
Tullia Padellini: Bank of Italy
Ludovic Panon: Bank of Italy
Francisco Requena: University of Valencia
Jacopo Timini: Bank of Spain

No 2506, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: We study how disruptions to the supply of foreign critical inputs (FCIs) —defined as vulnerable inputs and key inputs for the digital and green transition —may affect value-added at different levels of aggregation. Using firmlevel customs and balance sheet data for Belgium, France, Italy, Slovenia and Spain, our framework allows us to assess how geoeconomic fragmentation may affect European economies differently. Our baseline calibration suggests that a 50% reduction in imports of FCIs from China and other countries with a similar geopolitical orientation would result in sizable losses with significant heterogeneity across firms, sectors, regions, and countries, driven by the heterogeneous exposure of firms. Our findings highlight that the short-term costs of supply disruptions of FCIs can be substantial, especially when firms cannot easily substitute away from these products.

Keywords: Geoeconomic fragmentation; global value chains; global sourcing; international trade; imported inputs. (search for similar items in EconPapers)
JEL-codes: F10 F14 F50 F60 (search for similar items in EconPapers)
Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repecsrv.uv.es/paper/RePEc/pdf/eec_2506.pdf First version, 2506 (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:eec:wpaper:2506

Access Statistics for this paper

More papers in Working Papers from Department of Applied Economics II, Universidad de Valencia Contact information at EDIRC.
Bibliographic data for series maintained by Vicente Esteve ().