Global Value Chains Under Geoeconomic Pressure: Impact on Productivity

Jyrki Ali-Yrkkö and Tero Kuusi

No 180, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract The global economy has shifted from hyper-globalisation to an era of geoeconomics, where the “just-in-time” logic based on cost optimisation and inventory minimisation has been complemented by “just-in-case” thinking that emphasizes preparedness. At the corporate level, this shift in eras is reflected, for instance, in the need to recruit geopolitics experts right up to top management. Finnish industry is heavily integrated into global value chains. After 2021, the geopolitical risks associated with Finnish companies’ material and component imports multiplied. Although public debate highlights reshoring, very few operations have been relocated back to Finland. Instead, transferring operations abroad has become less common and now focuses on support functions rather than industrial manufacturing. The most critical finding is that the average increase in risk related to foreign imports reduces company productivity by just over two per cent compared to a firm whose risk profile did not increase. Although the era of geopolitics brings dark clouds over both the national economy and Finnish companies, every era produces winners. Those who succeed will be the ones that identify the growth opportunities brought by the new era.

Keywords: Productivity; Value chain; Geoeconomy; Geopolitics; Risk (search for similar items in EconPapers)
JEL-codes: F14 F52 F61 L23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-08-24
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