Nuria Gómez Sanz (p), Guadalupe Arce, Jorge Zafrilla, Fabio Monsalve

Shin-kun Peng

Changes in global value chains, aimed at avoiding chain breaks and in pursuit of greater resilience, are having unintended impacts on global emissions. We propose to calculate the emissions mitigation potential of redirecting global chains towards cleaner producers, greensourcing or rightsourcing strategies. A EEMRIO model, based on ICIO data, is used to compare carbon coefficients by sector and country, and to classify inputs providers according to an emissions per unit of output index or dirtiness index (Shapiro, 2021; Wiebe, 2018). This analysis allows building different scenarios where EU actual input purchases trends will be substituted by feasible cleaner alternatives, and the emissions reduction for each of these scenarios will be calculated.
Emissions calculations could be misleading when only the first link in the production chain is considered, since indirect production stages could invalidate direct emissions reductions. MRIO models consider all geographical and sectoral linkages along the production chain, so potential reductions will account for the whole of the carbon footprint (de Boer et al., 2019; Maeno et al., 2022).
In other to propose feasible options, different hypotheses will be considered in the scenarios’ definition. In a first set up our model considers the case where all the inputs demanded by the EU can be produced by the greenest producers. The calculation of emissions coefficients leads to identifying those sectors producing imported inputs generating lower emissions. In the first scenario we will distribute European imported inputs among these producers, allocating production up to the total production for each location, and allocating the reminder, whenever EU inputs requirement are above the cleaner producer capacity, to the location with the second lowest emissions, and so on until total imported inputs are allocated. The new footprint under this rightsourcing scenario will then be calculated.
However, this best scenario may not be achievable, so other second best options, where only a percentage of these producers' sales to the EU can be covered by the cleanest producers, and the EU has to allocate to other producers with a higher direct emissions coefficient, are considered. The calculation of emissions in scenarios with different assumptions will allow the creation of a realistic range of results. In hypothetical cases of similar emissions, priority would be given to EU members, strategic partners, countries where human rights are respected,... or other geo-strategic restrictions.

Santiago Pérez (p), Carlos Llano, Nuria Gallego

Nuria Gómez Sanz

Rooted in the most recent developments in trade theory and the gravity equation, this article identifies and measures the “Unobservable Trade Barriers” (UTBs) still performing in the European Single Market (ESM), with a focus on the effect of the restrictiveness of national and regional regulation. By means of recently developed structural gravity equations, and the recently developed panel of inter-regional trade of goods in Europe (ESPON-IRIE Project), covering 2010-2018 and 297 NUTS 2 regions for the EU27, UK, Lichtenstein, Iceland, Norway, and Switzerland, we obtain new results regarding the trade integration and the effect of the administrative borders as a deterrent of trade. Once that the UTBs are measured, we confront them with different indicators related to the multilevel regulation activity in Europe, as well as other sources of non-tariff barriers to trade that might be impeding the fulfilment of the ESM.

Juan José de Lucio (p), Carmen Díaz-Mora, Raúl Mínguez, Asier Minondo, Francisco Requena

Santiago Pérez

Since the outbreak of the Covid-19 pandemic, the disruption of supply chains has become a major concern for territories and global firms. This paper uses a representative sample of regionally disagregated Spanish manufacturers that participate in global value chains to analyze whether firms are implementing strategies to respond to this concern. Using data for the period 2017-2022, we find that, on average, manufacturers have not increased the number of countries they source their inputs from since the Covid-19 pandemic. Firms and regions have not either shifted their imports to countries that are geographically close or are friends of Spain, and have not reshored imports. However, firms significantly
increased the stock of intermediates in 2021. We only observe diversification strategies when firms have one supplier, export to many destinations, and the imported product has a high risk of experiencing a supply-chain disruption. Firms nearshore
and friendshore when their main supplier is geographically distant.


Firms and territories can use different strategies to cope with supply-chain disruptions. First, they can diversify the pool of suppliers. If supply disruptions do not occur simultaneously in all suppliers, diversification allows firms to substitute the input of an affected supplier with the input of a non-affected supplier. Second, firms can increase their inventory of components and finished products to hold safety stocks. A third strategy is reshoring or backshoring, which refers to a firm decision to repatriate previously offshored activities. Fourth, other less extreme ways to reduce foreign exposure is through nearshoring and friendshoring. These terms describe the decision to relocate previously offshored activities to a neighboring country of the home country and to trusted countries, respectively. Nearshoring responds to a firm’s efforts to shorten its supply chain and make firms more agile to respond to changing preferences in consumer demand. In a scenario of trade-policy and geopolitical tensions, dependencies on certain countries become a source of vulnerability for global supply chains. Friendshoring aims to address this concern. The explores whether firms and regions have implemented any of the above-mentioned strategies in response to the rising concern about supply-chain disruptions.

Shin-kun Peng (p), Ching-Mu Chen, Wan-Jung Chen, Raymond Riezman, Ping Wang

Juan José de Lucio

If international trade is strictly trade in intermediate goods, would the common pre-sumption, that small, less developed economies (the South) lose from a tariff retaliation game, still be true? We address this question by constructing a dynamic general equilibrium model in which the North and South trade technology-embodied intermediate goods. The presence of extensive margin effects yields a novel channel of scale-scope trade-o¤: The South counters the losses from a trade war in the volume and value of trade (scale) with an upward movement along the value chain (scope), thereby mitigating the detrimental effects of the protective tariff policy. Using calibration we find that for our benchmark model the reduction in the volumes and values of trade caused
by a tariff retaliation game is mitigated, and the scale-scope trade-o¤ induces a moderately higher
average productivity and aggregate technology used by the South.