How to Institutionalise European Industrial Policy (for Strategic Autonomy and the Green Transition)

Fontana, Olimpia; Vannuccini, Simone

doi:10.1007/s10842-024-00429-2

J Ind Compet Trade

2024

DOI: 10.1007/s10842-024-00429-2

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How to Institutionalise European Industrial Policy (for Strategic Autonomy and the Green Transition)

Olimpia Fontana,

Simone Vannuccini

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2024

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Cited by 1 publication

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How fragile are European GVCs? The role of functional diversification and implications for industrial policy

Coveri,

Giammetti,

Zanfei

2024

Preprint

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This paper examines the relationship between functional diversification and foreign input reliance (FIR) in European countries, with a focus on manufacturing sectors. We propose that greater functional diversification is a key strategy to soften dependency on foreign inputs, thereby mitigating the risks associated with Global Value Chain (GVC) disruptions. We elaborate on recently developed indicators for GVC exposure based on international gross trade flows and test their association with a novel measure of functional diversification, proxied with data on Foreign Direct Investments (FDIs) across value chain activities. Our findings reveal that functional diversification is negatively associated with FIR, particularly from extra-EU28 sources, indicating that European countries can reduce exposure to GVC disruptions by diversifying value-adding functions. However, this relationship is also found with reference to the intra-EU FIR component, suggesting that functional diversification strategies undertaken at the level of individual member states may end up weakening European trade integration. We conclude that the EU’s Open Strategic Autonomy framework should carefully consider coordinated industrial strategies to strengthen the EU’s capacity to navigate GVC disruptions without undermining intra-EU trade ties.

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How fragile are European GVCs? The role of functional diversification and implications for industrial policy

Coveri,

Giammetti,

Zanfei

2024

Preprint

View full text Add to dashboard Cite

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How to Institutionalise European Industrial Policy (for Strategic Autonomy and the Green Transition)

Cited by 1 publication

References 38 publications

How fragile are European GVCs? The role of functional diversification and implications for industrial policy

How fragile are European GVCs? The role of functional diversification and implications for industrial policy

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