Prof. Roberta Capello, Dr. Roberto Dellisanti (p), Prof. Giovanni Perucca

The renewed focus on trade dynamics in Europe reflects rising concerns over economic security amid geopolitical fragmentation, supply chain tensions, and systemic shocks. In response, the EU’s agenda of Open Strategic Autonomy and the European Economic Security Strategy aims to reconcile openness with resilience by identifying and managing critical dependencies. Yet, these approaches remain largely spatially neutral, overlooking the territorial embeddedness of vulnerabilities and capabilities within European production systems.
This paper advances a regional perspective tailored to the heterogeneous positions of European regions within global trade. We define regional economic security over two dimensions: dependency and economic importance, able to describe a region’s capacity to sustain economic activity while mitigating exposure to disruptive external dependencies, without forgoing the benefits of trade integration. Specifically, our conceptual refinement explicitly incorporates regional peculiarities as their industrial specialization. Some regions are already European or global leaders in specific products and technologies, with a competitive edge rooted in accumulated capabilities, skills, and innovation ecosystems. Other regions have instead benefited from trade dependencies by accessing relatively cheaper external inputs and distant markets, at the cost of high risk exposure. For them, economic security is less about autonomy per se and more about deep, stable, and diversified integration within European production networks, which reduces geopolitical exposure while preserving openness. Embedding economic security within differentiated regional pathways provides a more nuanced understanding of how Europe’s strategic autonomy is built—unevenly and incrementally—from the regional level upward.

Prof. Roberta Arbolino, Dr Raffaele Boffardi, Dr. Luisa De Simone (p), Prof. Salvatore Capasso

This study analyses how non-tariff measures (NTMs) shape the transmission of external trade shocks across European regions. Adopting a double-stage empirical strategy based on local projections, we first estimate the dynamic effects of tariff shocks on regional trade and then assess how these effects vary across regions characterised by different levels of NTMs. Rather than modelling NTMs as transitory shocks, we treat them as a sum of active NTMs, and so in terms of a persistent regulatory instrument that conditions the magnitude of tariff-induced trade responses. Our results reveal substantial heterogeneity in the impact of tariff shocks across European regions and show that, in the presence of high pre-existing levels of NTMs, the negative effects of tariffs on export performance are significantly attenuated. These findings contribute to the literature on trade spillovers, regulatory environments, and regional economic resilience, highlighting the importance of accounting for structural regulatory conditions when evaluating the effects of external trade shocks and the role of EU integration policies.

Dr. Luigi Tredicine (p), Prof. Jacopo Canello, Prof. Gery Gereffi, Prof. Konstantin Wacker

This paper examines the role of micro and small enterprises (MSEs) — or "mini-multinationals" — in the ongoing reconfiguration of global value chains (GVCs) amid heightened geopolitical tensions and security-driven industrial policy. While the literature on GVC restructuring has largely focused on large lead firms and flagship investments, we argue that MSEs represent a critical "missing middle" whose foreign direct investment (FDI) decisions shape the territorial viability of state-led reconfiguration strategies. Drawing on a novel firm-level dataset that combines greenfield FDI project data from ORBIS Cross-Border Investment (CBI) with firm-level information from ORBIS for the period 2014–2025, we compare the sectoral composition, geographical footprint, and policy responsiveness of mini-multinationals and large multinational enterprises (MNEs). Preliminary evidence reveals systematic differences: mini-multinationals are more concentrated in less capital-intensive industries and may exhibit distinct geographic patterns relative to their larger counterparts. To assess policy responses, we implement an event-study design centered on the onset of the Trump II presidency in early 2025 — a key inflection point for tariff announcements and security-driven trade measures. Our findings contribute to debates on state agency, supply-chain resilience, and the microfoundations of GVC reconfiguration, highlighting that effective industrial policy must account for the investment behavior of small firms, not only large multinationals.

Prof. Ayda Eraydin (p)

When Economic Security and Growth Are Constrained: Trade Vulnerability in European Regions

Abstract

Trade integration has long been viewed as a central driver of regional growth and convergence, associated with productivity gains, export upgrading, and enhanced competitiveness. Yet recent crises—including the global financial crisis, energy supply disruptions, and renewed geopolitical tensions—have exposed the fragility of trade-dependent growth models. While integration into international supply chains can generate efficiency gains, it also increases exposure to external shocks, raising new concerns about economic security and sustainability. These developments call for a re-examination of how trade openness, regional growth potential, and vulnerability interact across space.

This paper analyses how trade-related vulnerabilities are unevenly distributed across European regions and how they shape regional growth trajectories under conditions of heightened uncertainty. It bridges the regional trade and vulnerability literature with emerging policy debates on economic security and new growth perspectives from a regionally grounded political economy approach. The first objective is conceptual: to move beyond aggregate trade openness indicators by developing a multidimensional framework of trade-induced growth constraints. The second objective is empirical: to assess whether regions facing stronger trade constraints exhibit systematic economic challenges, including weaker growth performance, greater volatility, declining competitiveness, lagging technological capacity, and shifts toward more locally embedded economic activities.

Empirically, the paper develops a Trade Constraint Index (TCI) that captures the extent to which regional growth is externally constrained by trade dependence. The index integrates three dimensions: trade exposure (export intensity and reliance on imported intermediates), trade sensitivity (export concentration and energy/material intensity), and adaptive capacity (sectoral diversification, knowledge intensity, and institutional capacity). Higher values indicate stronger trade-induced growth constraints. Using fixed-effects panel regression models, the analysis examines how trade constraints influence growth, competitiveness, technological upgrading, and structural reorientation across regions.

The findings highlight the magnitude and spatial unevenness of trade-induced constraints across European regions. Overall, the paper argues that trade vulnerability has become a central channel through which economic security concerns and evolving growth debates are articulated at the regional scale in an increasingly volatile global economy.

Prof. Zoltan Gal (p), Bennour Med Hsin

This paper examines how foreign direct investment (FDI) shapes regional development trajectories in Central and Eastern Europe using a NUTS-2 panel dataset (2008–2018) covering the Visegrad countries plus Slovenia, Croatia and Romania. The analysis integrates Eurostat regional FDI stocks, regionalised EU input-output tables measuring GVC upstreamness, and EPO patent indicators capturing technological complexity, diversity and specialisation, while controlling for regional fitness and knowledge structure.
The empirical framework adopts a role-based GVC perspective distinguishing controller, supplier, assembler and outsider regions following the Capello–Dellisanti (2024) classification. Building on this framework, the paper links GVC roles to regional knowledge structures and absorptive capacity, allowing an assessment of how FDI interacts with regional innovation characteristics. Interaction models estimate how FDI effects vary across regional functions and sectoral structures.
The results show that FDI is a strong driver of labour productivity growth, particularly in assembler regions, confirming its efficiency-enhancing role. However, these gains do not translate into systematic functional upgrading or sustained upstream mobility. Manufacturing-related FDI remains tied to downstream assembly activities, while upstream shifts are limited and primarily associated with regional R&D intensity rather than FDI volume.
Technological upgrading outcomes are weak and spatially uneven. Once regional fitness and knowledge structure are controlled for, FDI has only marginal effects on capability building and becomes negative in outsider regions. Rather than promoting diversification, FDI induces role-contingent specialisation that narrows regional knowledge bases. Regional fitness, and not FDI, emerges as the main driver of endogenous complexity growth.
This decoupling between productivity gains and technological upgrading suggests the persistence of an assembler trap across large parts of the region. Integration into global production networks therefore occurs in CEE regions without corresponding integration into global knowledge creation. The findings indicate that FDI tends to reinforce existing GVC positions more than it facilitates upward transitions. Sustainable upgrading requires policies strengthening domestic innovation capacity, absorptive capabilities and region-specific R&D ecosystems; otherwise, FDI-led growth risks locking regions into stable but structurally dependent development paths.