Connectivity and Contagion: How Industry Networks Shape the Transmission of Shocks in Global Value Chains

Charlie Joyez
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Charlie Joyez: Université Côte d'Azur, GREDEG, CNRS, France

No 2025-36, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: We study how disruptions propagate through global value chains and how network structure conditions their e ects. Using Eora country-industry data for 189 countries and 26 industries (1996-2015), shocks are defined by a distribution-based rule; exposure counts disrupted upstream/downstream partners, and redundancy counts non-disrupted pre-existing links. We estimate fixed-e ects impact models - where robustness is smaller contemporaneous deterioration conditional on exposure - and a grouped-time complementary log-log hazard - where resilience is faster return to the pre-shock level. Two findings emerge. First, exposure propagates, depressing output, value added, and exports and slowing recovery. Second, redundancy mitigates, offsetting the impact and raising the recovery hazard. As an illustration, high-technology activities appear less sensitive on impact and recover faster than low-technology ones, with the advantage explained by higher redundancy despite deeper connections. These results suggest strengthening robustness and resilience by deepening GVC integration through strategic redundant linkages, rather than retreating from openness.

Keywords: Global Value Chains; Business cycle shocks; High-Technology (search for similar items in EconPapers)
JEL-codes: F14 F15 F44 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2025-09
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