Guillaume Daudin, Violaine Faubert, 13 May 2022

The rise of global value chains has led to a greater use of input-output tables to study international linkages. This column analyses cost-push inflation using world input-output tables. In the light of the recent surge in commodity prices, it explores which countries are most vulnerable to energy cost-push inflation and documents the large exposure of Eastern and central European economies to a rise in Russian hydrocarbon prices. Input-output tables are used to document the heterogeneous reactions of consumer prices to exchange rate variations across countries, reflecting differences in foreign product content of consumption and intermediate products.

Deborah Winkler, Lucie Wuester, 11 May 2022

The trade disruptions resulting from Russia’s invasion of Ukraine have revealed the vulnerabilities of relying on a limited range of suppliers for imports with few substitutes. This column shows that the impact of the war through Russia’s participation in global value chains relates to its ‘upstream’ position.  Countries in closer geographic proximity to Russia face higher risks due to their greater direct trade links with Russia. But the countries that will be affected most severely are those in global value chains reliant on products from Russia with fewer substitutes, such as rare metals.

Ting Lan, Davide Malacrino, Adil Mohommad, Andrea Presbitero, Galen Sher, 11 May 2022

Trade in goods has rebounded quickly from the pandemic, while trade in services has not. This column finds that the pandemic broke the old trade patterns and that lockdowns had unintended international spillovers. Although global value chains have adapted, ongoing supply disruptions and the risk of future adverse shocks point to the need for more resilient value chains. The authors argue that in contrast to those calling for reshoring, a better way to build resilience is to diversify away from domestic sourcing of inputs and make it easier for producers to substitute between inputs supplied by different countries.

Maksym Chepeliev, Maryla Maliszewska, Maria Filipa Seara e Pereira, 06 May 2022

The Russian invasion of Ukraine is disrupting global supplies of essential commodities, pushing prices higher, slowing trade, and driving down incomes. This column argues that developing countries that are large agricultural and energy importers are being hit hardest. While some commodity exporters might be able to step up exports to benefit from increasing global prices, they could experience a restructuring of their trade patterns, resulting in a lower integration into global value chains. Consumers across the world are worse off, with the poorest being impacted the most adversely.

Michele Ruta, 05 May 2022

The war in Ukraine has suddenly increased geopolitical risks. This column argues that firms will respond to the shock by reassessing security-related risks, leading to changes in the structure of supply chains. But given the capital in place, the cost of searching for alternatives, and factors such as wage differentials across countries, this process is likely to be gradual rather than sudden and will affect different sectors and products differently. It will not result in a reversal of globalisation, unless it is supported by pronounced government intervention.

Alessandro Borin, Michele Mancini, Daria Taglioni, 01 March 2022

Environmental, political, economic, and health disruptions in recent years have helped fuel concerns that too much interdependence through global value chains may be a problem. This column compares the relative effects of a domestic demand shock to those of a global value chain-related shock and concludes that engagement in global value chains allows unexpected shocks to demand to be managed better than in a world of predominantly domestic production, traditional trade, or regional value chains. Global value chain participation dampens exposure to risk, as idiosyncratic shocks are mitigated by a higher market differentiation.

Raphaël Lafrogne-Joussier, Julien Martin, Isabelle Mejean, 05 February 2022

Global supply chains have been central in economic and policy debates since the start of the Covid-19 pandemic. This column uses the first lockdown in China in 2020 to study how firms involved in global value chains can help mitigate the effects of supply disruptions. Using monthly data on French firms, it finds that inventory management helped firms mitigate the shock, but the geographic diversification of input sourcing did not. Governments may thus consider giving incentives to firms to depart from just-in-time production processes, especially for those engaged in the production of critical products. 

Sunghun Lim, 06 November 2021

Agricultural global value chains grew rapidly after WWII, transforming the nature of agri-food production worldwide. Still, little is known about how taking part in these chains changes the structure of an economy. This column constructs a panel dataset from 155 countries for the period from 1991 to 2015, examining the effect that participation had on each country’s structural transformation and uncovering evidence that runs counter to conventional wisdom: modern agrarian economies are leapfrogging the manufacturing sector to develop their agriculture and service sectors through participation in agricultural global value chains.

Hongyong Zhang, 13 September 2021

COVID-19 has had large impacts on global production and international trade. The column uses quarterly aggregate-level data on foreign affiliates of Japanese multinational corporations to show that multinational production and supply chains were negatively affected by the COVID-19 pandemic, especially in the 2nd quarter of 2020. The sales of Japanese manufacturing affiliates almost recovered in the 4th quarter of 2020, indicating the resilience of global production and multinationals’ supply chains. But there are large variations in recovery across countries.

Caroline Freund, Aaditya Mattoo, Alen Mulabdic, Michele Ruta, 18 August 2021

The immediate consequences of natural disasters for global value chains are well-documented, but little is known about the longer term. This column examines the long-term impact of the 2011 earthquake in Japan on auto and electronics supply chains using data on imports of Japanese products worldwide. Imports shifted to new suppliers, especially in products where dependence on Japan was greater. The new suppliers tended to be developing and large countries, suggesting cost and scale were important. The observed pattern of switching may be relevant to the COVID-19 pandemic.  

Pamina Koenig, Sebastian Krautheim, Claudius Löhnert, Thierry Verdier, 30 July 2021

With economic globalisation facing a legitimacy crisis fuelled by various scandals associated with globalised value chains, advocacy NGOs and their campaigns are in the limelight. Still, little systematic knowledge has been generated on how global sourcing and exporting decisions of firms interact with the upsurge of this international social activism. This column uses a unique dataset on NGO campaigns against firms to show how the internationalisation and geographical structure of NGO campaigns are closely intertwined with patterns of global production and trade. 

Giuseppe Berlingieri, Luca Marcolin, Emanuel Ornelas, 28 July 2021

Trade in services is important but difficult to measure. This column introduces a new dataset that helps understand the contribution of services to global value chains and their role in the process of exporting goods. Firms with longer experience in exporting goods to a destination tend to source export-related service inputs from there rather than domestically, and do so within the boundaries of the business group rather than at arm’s length.

Georgios Georgiadis, Helena Le Mezo , Arnaud Mehl, Cédric Tille, 26 July 2021

The US dollar has a dominant role in currency invoicing of global trade, covering around 40% of international transactions, followed by the euro and the renminbi. This column analyses the effects of economic fundamentals and government policies on currency invoicing patterns. Strategic complementarities and integration in global value chains are both important determinants of dollar and euro invoicing in trade with the US and the euro area, while the establishment of currency swap lines by the People’s Bank of China has been associated with increases in renminbi invoicing, with an adverse effect on dollar use. 

Peter Eppinger, Gabriel Felbermayr, Oliver Krebs, Bohdan Kukharskyy, 07 July 2021

The major disruptions to global value chains caused by the Covid-19 pandemic have prompted politicians to think about reducing the reliance on imported inputs by decoupling from global value chains. This column quantifies the welfare costs of decoupling as well as the potential gains from reduced exposure to foreign shocks. The bottom line is that decoupling does not pay off. 

Giovanni Pasquali, Aarti Krishnan, Matthew Alford, 01 July 2021

Trade in South-South global value chains has increased significantly, driven by trade agreements among developing countries and the growth of Southern lead firms. This column uses data on Kenyan horticulture suppliers to explore whether suppliers from the Global South are benefitting from increased opportunities for economic upgrading as trade in these value chains grow. It finds that suppliers who develop multi-chain strategies across both the global North and South diversify production more and achieve higher economic returns than those who do not. 

Alessandro Antimiani, Lucian Cernat, 24 June 2021

Many believe that the global trading system could offer little more to least developed countries beyond the various unilateral preferential schemes currently in place. This column argues that there is room for new multilateral initiatives to strengthen the participation of these countries in global value chains. It advocates for a new ‘GVCs for LDCs’ global preferential scheme based on least developed countries’ value added, thereby covering exports by these countries along the entire supply chain. Estimates suggest that such a scheme would increase global trade, improve least developed countries’ value added, and promote further value chain integration between these and other developing countries.

James Fetzer, Tina Highfill, Kassu Hossiso, Tom F. Howells III, Erich H. Strassner, Jeffrey A. Young, 23 June 2021

Research has shown that multinational enterprises located in the US account for roughly 90% of US exports of goods and for over 90% of exports of selected services. While these estimates show that multinationals clearly dominate trading activity of gross exports, they overstate the role of multinationals in US exports since non-multinationals are an important part of the production supply chain and make significant contributions to the value embodied in these exports. This column uses experimental Trade in Value Added statistics estimated from extended supply-use tables for the US for 2005 and 2012 to show that both multinational and non-multinational firms contribute significant amounts of content embodied in US exports.

Timon Bohn, Steven Brakman, Erik Dietzenbacher, 15 June 2021

Global value chain analyses to examine the income gains from trade are particularly complicated by ownership relations between headquarters and subsidiaries. The consequence is that the value added generated within one country may well result in income in another country. This column presents the income perspective as a framework to deal with this complication. Trade deficits become smaller for wealthy countries and larger for developing countries. Discussions on ‘unfair’ trade should take the income perspective on board.

Yuqing Xing, 27 May 2021

Factoryless goods producers are a fruitful consequence of the evolution of global value chains. This column shows that the trade value of their output may be largely underestimated. The true export value to producers like Apple and Nike to countries like China – where many of these companies’ products are assembled – is far higher than the value of the tangible good itself, when embedded intangible assets and IP are taken into account. Yet this is not reflected in the measurement of bilateral trade flows. If it were, it would paint a very different picture of US exports and the trade deficit.

Assaf Razin, 23 April 2021

Concerns associated with the Covid-19 pandemic have led to new rationales of protectionism, with renewed emphasis on domestic production and sourcing. This column compares the current economic crisis brought on by the pandemic to previous major economic crises and examines what this could mean for the future of various aspects of globalisation.



CEPR Policy Research