Inputs in Distress: Geoeconomic Fragmentation and Firms’ Sourcing

Ludovic Panon, Laura Lebastard, Michele Mancini, Alessandro Borin, Peonare Caka, Gianmarco Cariola, Dennis Essers, Elena Gentili, Andrea Linarello, Tullia Padellini, Francisco Requena and Jacopo Timini
Additional contact information
Laura Lebastard: EUROPEAN CENTRAL BANK
Alessandro Borin: BANK OF ITALY
Peonare Caka: BANK OF SLOVENIA
Gianmarco Cariola: BANK OF ITALY
Elena Gentili: BANK OF ITALY
Tullia Padellini: BANK OF ITALY
Francisco Requena: UNIVERSITY OF VALENCIA

No 2436, Working Papers from Banco de España

Abstract: We study how disruptions to the supply of foreign critical inputs (FCIs)—inputs primarily sourced from extra-EU countries with highly concentrated supply, advanced technology products or inputs which are key to the green transition —may affect value-added at different levels of aggregation. Using firm-level 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 value-added losses with significant heterogeneity across firms, sectors, regions and countries, driven by the heterogeneous exposure of firms. Our findings show that the short-term costs of supply disruptions of FCIs can be substantial, especially if firms cannot easily switch away from these inputs.

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)
Pages: 56 pages
Date: 2024-10
New Economics Papers: this item is included in nep-cna and nep-eec
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Citations: View citations in EconPapers (1)

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https://www.bde.es/f/webbe/SES/Secciones/Publicaci ... 24/Files/dt2436e.pdf First version, October 2024 (application/pdf)

Related works:
Working Paper: Inputs in distress: geoeconomic fragmentation and firms' sourcing (2024)
Working Paper: Inputs in distress: geoeconomic fragmentation and firms’ sourcing (2024)
Working Paper: Inputs in distress: Geoeconomic fragmentation and firms' sourcing (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2436

DOI: 10.53479/37834

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