Roberta Capello, Roberto Dellisanti (p), Giovanni Perucca

Jacopo Canello

Nearshoring, defined at an aggregate level as a situation in which an economic system utilises a greater proportion of inputs produced by nearby areas compared to those produced in faraway areas, risks becoming an important source of functional income redistribution. The social and spatial concentration of capital, in fact, amplifies the impact of nearshoring-induced profits, disproportionately benefiting a small group of capital owners and core territories. This dynamic leads to faster growth in capital returns compared to labour wages, exacerbating income inequalities both among individuals and across regions. Such an issue has never been tackled in the literature before at regional level, neither conceptually nor empirically. This paper fills such a gap. It elaborates on the effects of nearshoring on the remunerations of production factors and provides empirical evidence testing the expectations on the European regions. Results witness that functional income redistribution in favour of capital owners is higher in regions where capital is concentrated, strongly affecting intra-regional functional income inequalities. Within such regions, core areas, where financial capital is concentrated, register the highest increase in income disparities, witnessing that nearshoring can become a source of regional disparities. If this is the case, regional structural policies mitigating the worsening of income disparities are necessary if nearshoring further develops in Europe through the new trade policy as the “Open Strategic Autonomy” advocated by the EU.

Jacopo Canello (p), Gianluca Capone, Cristina Re

Xieer Dai

This work investigates how the entry and exit of foreign MNEs influence upgrading strategies among small subcontractors in the Italian clothing and footwear sectors. Combining rich firm-level data on MSEs with micro-level data on FDI, we identify how foreign MNEs investment and disinvestment decisions influence four dimensions of local subcontractors’ upgrading: High value-added activities upgrading, Client portfolio upgrading, Activity portfolio upgrading and Output upgrading. These dimensions allow us to explore how subcontractors adapt to structural changes in GVCs and how opportunities or disruptions created by foreign MNEs’ investment and disinvestment decisions shape their trajectories.
The empirical analysis builds on the windows of opportunity framework, exploited by the evolutionary economics literature to study the catch-up process by latecomer firms in developing countries that determined many successful episodes of upgrading and shifts of industrial leadership in many sectoral systems. Within this framework, a window of opportunity can be defined as a disruption in the dynamics of a sectoral system, representing a change that is significantly more radical than the continuous, yet incremental processes typically driving the standard evolution of a sector. Recent contributions in this literature have highlighted i) the importance of adopting a firm-level perspective when studying windows of opportunity, in order to grasp the significant differences in how individual firms respond to changes in technology, demand or policies and ii) the relevance of external linkages in allowing firms to identify emerging opportunities.
Exploiting the recent developments of this literature, this paper identifies the entry and exit of foreign MNEs’ subsidiaries in a locality as regional windows of opportunity for local subcontractors, which increase the chances of these firms to engage in upgrading. While the positive local spillovers of MNEs’ entry on local subcontracting networks have been explored more frequently, the exit of MNEs from local production systems is typically regarded as a negative shock rather than an opportunity. However, recent studies suggest that disruptive events can also create opportunities for firms to upgrade the existing status quo. In our context, local subcontractors affected by foreign MNEs’ GVC reconfiguration strategies may be compelled to upgrade their value chain strategies, serving as a wake up call for transformation.

Xieer Dai (p), Ziling Li

Laura Resmini

This paper investigates the impact of Chinese investment on target container ports throughput using port connectivity data of 392 ports in 69 countries from 2006 to 2023. Through trade network integration, Chinese investors' terminal operations and management expertise can improve terminal efficiency, facilitating higher trade volumes. Additionally, Chinese enterprises that own and operate vessel fleets can integrate overseas ports into their international shipping networks, bringing cargo flows and shipping demand more efficiently to the local area.

Significant investments have been made in European ports due to China's Belt and Road Initiative(BRI), with the port of Piraeus in Greece being a prime example. Since being fully run by a Chinese state-owned enterprise (COSCO) in 2016, Piraeus has become one of the fastest-growing ports in the world. The expansion of ports like Piraeus has been largely attributed to changes in liner firms' direct ship calls and network arrangements, along with the enhancement of terminal facilities brought about by BRI investments.

Using spatial difference-in-difference(SPDID), we find that Chinese investment in overseas container terminals can positively impact their shipping capacity (using Liner Shipping Bilateral Connectivity Index data sourced from UNCTAD) and increase the host countries' international trade volume. The spatial spillover effect significantly improves regional shipping capacity besides the targeted ports. We use propensity score matching (PSM) as a preprocessing step to address potential selection bias since the selection of targeted ports is not random. Port feature variables obtained from the World Port Index (Pub 150) are used to match the control group and treatment group.

Furthermore, trade network integration increases the regional centrality of targeted ports and lowers maritime container transportation costs. China’s port investments amplify the regional impacts of GVC reorganization by redefining trade geographies and reshaping comparative advantages.

Laura Resmini (p), Vieri Calogero, Enrico Bergamini

Roberto Dellisanti

The importance of functional upgrading along global value chains (GVCs) has been widely documented in scientific research (Gereffi, 1999). This study explores the potential benefits of functional upgrading for European regions (NUTS2). Regions assume diverse roles within GVCs, ranging from hosting the headquarters of multinational enterprises (MNEs) to serving as production hubs. By analyzing their trajectories along the smile curve, the study investigates how these transitions impact key regional performance indicators, particularly labor productivity and industrial renewal capacity.
Drawing on data from the entire universe of global multinationals in the historical Orbis database (2007–2022) and sectoral information at the NACE 4-digit level, we construct a measure of the global industrial space (Hidalgo et al., 2007). This approach enables the introduction of a novel regional upgrading indicator that leverages the relatedness metric (Hidalgo et al., 2018) to quantify the distance of each NUTS2 region from frontier functions in pre- and post-production activities within GVCs.
This methodology facilitates a highly granular analysis of regional dynamics along GVCs, both sectorally and geographically. Among its key contributions, this is the first study to position European regions within GVCs using the complete universe of multinationals and the first to apply the relatedness indicator to trace movements along global value chains. Furthermore, it establishes a direct link between functional upgrading, productivity growth, and industrial renewal, offering valuable insights for policymakers seeking to enhance regional competitiveness in a rapidly evolving global economy.