Roberta Capello, Roberto Dellisanti (p)

Laura Resmini

Global Value Chains (GVCs), since their inception, have constituted a significant factor in the growth and development of territories. The increase in the volume of trade between countries has led to unprecedented opportunities for growth, even in areas that have traditionally been on the margins of the global economy becoming the target of offshoring activities of world leading firms. However, after years of expansion and growth, crises over the past two decades, such as financial crises, debt crises, the COVID-19 pandemic, and conflicts, have contributed to a reassessment of the benefits derived from international trade. This highlights the existence of a dark side of trade, related to both an increase in inequalities and growing geopolitical instabilities.
In this context, the strategies for reconfiguring GVCs (e.g., the European Union's Open Strategic Autonomy) aim to make production chains more secure and efficient. Nearshoring, understood as the relocation of inputs for production in a geographically closer area, is one such practice. The economic reasons behind this choice can be diverse, but what is often underestimated is that behind these various reasons there are different territories where these production chains are re-established.
This paper follows three main steps. First, it maps the areas where nearshoring lands in European regions, categorising them into areas with high automation intensity, low labour costs, and areas where quality is higher — all factors contributing to increased production efficiency. Second, through econometric analysis, the paper discusses how the host regions of nearshoring exhibit heterogeneous economic growth rates depending on the underlying reasons for the phenomenon. Finally, through a simulation on the Theil Indexes (both between regions and within countries), the paper explores how regional inequalities vary with changes in nearshoring practices.
Preliminary results suggest to rethink global trade carefully, highlighting that the impact for regions may be fuzzy.

Laura Resmini, Vieri Calogero, Simona Comi (p)

Roberto Dellisanti

In this study, we examine the dynamics of polarization in European NUTS-2 regions between 2007 and 2021, as well as the contribution of participation in Global Production Networks (GPNs) and economic complexity to this phenomenon. The underlying hypothesis is that the presence of a pool of diverse and sophisticated knowledge plays a heterogeneous mediating role both at the level of region and sector. For sectoral complexity, in addition to the traditional PCI indicator (Hidalgo & Hausmann), we develop an occupation-based complexity indicator that aggregates information related to the diversity and sophistication of occupations in each sector.
We use three main data sources: Amadeus/Orbis for the GPNs of European Multinational Enterprises, the Labour Force Survey Database for ISCO occupations, and SBS on EUROSTAT to calculate economic complexity.
In this way, we examine, through a mediation analysis, the role of economic and sectoral structure in mediating between GPN participation and job polarization.
This work contributes to the literature by developing specific economic complexity tools to measure complexity in relation to the occupations employed in each sector. Additionally, it is the first study to evaluate the effect of Global Production Networks (GPNs) driven by European multinational enterprises on regional polarization. Furthermore, this methodology allows us to untangle the effects of both active and passive participation in GPNs on the local labor market.

Giovanni Perucca (p), Roberta Capello, Damares Lopes Afonso

Simona Comi

While the literature on the distributional effects of GVC participation is quite abundant, the nexus between the regional income distributional effects generated by GVC participation remains instead largely unexplored, despite its paramount importance in Europe, where much of the GVC trade occurs among European countries, all affected by profound and increasing intra-country disparities. With an approach at the cross-yard of international and regional economics, the paper aims to fill such a gap, by presenting a theoretical model able to apportion the effects predicted by the Grossman and Rossi-Hansberg model at the regional level, and by proving the obtained expectations for intra-country regional income inequalities in Europe. Results show that a heterogeneous functional specialization of regions within a country amplifies the effect of GVCs on inequalities.

Simona Comi, Mara Grasseni, Laura Resmini (p)

Giovanni Perucca

The Covid-19 pandemic has represented an unexpected shock that has deeply affected all countries, both from a health and economic point of view. In an already complex situation, it has raised uncertainty, bringing out doubts and new concerns on the international organization of the production process. The global supply chains have become more complicated. COVID-19 has forced governments to lockdown, with interruption of production, closure of national borders, social distancing restrictions, and, consequently, profound implications on policy and business decisions.
In this paper, we analyzed how the COVID-19 pandemic might have affected GVC configuration, investigating how MNEs adjusted their strategies for the location of their foreign subsidiaries. For this purpose, we observed EU multinational firms and their network of foreign subsidiaries in three different years: 2014, 2018, and 2021.
The impact of the Covid-19 pandemic was geographically uneven, both in terms of health impact and in terms of restrictions imposed. In this work, we exploited this geographical heterogeneity to establish our identification strategy and to compare the EU regions most affected by COVID-19 with EU regions less affected by the virus.
The results show that the intensity of the COVID-19 shock matters since MNEs headquartered in regions severely affected by the COVID-19 pandemic reacted differently from their counterparts headquartered in the least affected regions. In addition, a clear differentiation between EU MNEs originating from Eastern EU member states and those originating from Western EU member states emerged, with the former engaged in offshoring (outside the EU) processes but the latter more prone to re- or near-shoring production activities.