Decoupling Global Value Chains

Arbeitspapier

Recent disruptions to global value chains (GVCs) have raised an important question: Can decoupling from GVCs increase a country’s welfare by reducing its exposure to foreign supply shocks? We use a quantitative trade model to simulate GVCs decoupling, defined as increased barriers to global input trade. After decoupling, the repercussions of foreign supply shocks are reduced on average, but some countries experience magnified effects. Across various scenarios, welfare losses from decoupling far exceed any benefits from lower shock exposure. In the U.S., a repatriation of GVCs would reduce national welfare by 2.2% but barely change U.S. exposure to foreign shocks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9079

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Empirical Studies of Trade ; Trade: Forecasting and Simulation ; Economic Impacts of Globalization: Macroeconomic Impacts
• Subject: quantitative trade model ; input-output linkages ; global value chains ; Covid-19 ; supply chain contagion ; shock transmission

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eppinger, Peter ; Felbermayr, Gabriel J. ; Krebs, Oliver ; Kukharskyy, Bohdan
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/235449
• Last update: 10.03.2025, 11:42 AM CET