➡️ These vulnerabilities persist over time ⏳: 41% of trade dependencies identified before the global financial crisis persisted immediately after, and 35% remained in the long run. This highlights their structural nature and the difficulty of reducing them.

➡️ Some dependencies are structurally critical for European industry 🏭: The most vulnerable products are concentrated in chemicals, metals, and ceramics, industries that are essential for many strategic sectors.

➡️ Upstream trade dependencies are the riskiest ⚠️: Vulnerabilities occurring more than three stages before the final consumer account for 49% of critical products. Disruptions in these segments could severely impact European supply chains.

➡️ Trade vulnerabilities are increasingly concentrated on Chinese imports 📈: China’s share in the EU’s trade dependencies has risen, while the share of the US and the rest of the world has decreased by 3 to 10 percentage points.

➡️ Out of 5,381 products imported by the EU27, the # of vulnerabilities fluctuates between 359 (large criteria) and 29 (using the most restrictive methodology with our five criteria developed with Isabelle). This small number does not mean low risk, these are strong vulnerabilities characterized by:

🗓️ Rdv ce samedi à 15h à la Citéco (Cité de l'Économie) pour assister à une conférence sur les inégalités et discriminations dans l’emploi, aux côtés de Dominique Meurs et @rolandrathelot.bsky.social

✅ Entrée gratuite : tickets.citeco.fr/fr-FR/mes-bi...

@crestumr.bsky.social @ipparis.bsky.social

En résumé 👇

Beyond economic costs, disruptions in critical goods, such as pharmaceuticals, can lead to severe non-economic consequences, including human losses. EU trade dependencies in pharmaceuticals are however limited due to significant European production and flexibility in sourcing active ingredients.

Resilience policies should also consider the estimated economic cost of disruptions, along with the product’s importance in the value chain. To pursue this argument, we have linked vulnerable products to their position within GVCs and identified 22 products that increase EU supply chain risks.

First, we examined geopolitically risky products by identifying 41 products sourced from non-NATO (North Atlantic Treaty Organization) countries, four of which are sourced from countries with high geopolitical risk.

Though trade data are accessible, understanding EU production capacities is hindered by limitations in available statistics. We discuss how to leverage EU’s existing data to enhance EU's grasp of production capabilities and indirect trade exposure (which is high) @eu-eurostat.extwitter.link

Sectoral distribution of vulnerabilities according to the different criteria.

Beginning with 5,381 products imported by the consolidated EU from 2015 to 2019, 378 products are identified by the EC, keeping those with >50% of EU absorption from foreign firms reduces the count to 228. Further refining to products with limited ex-post substitution reduces to 49.

Several methodologies have emerged following the Covid-19 pandemic, including those by the French Treasury (Bonneau and Nakaa, 2020), the French Council of Economic Advisors (Jaravel and Mejean, 2021), the European Commission (2021), Mejean and Rousseaux (2024), and the CESifo (Baur and Flach, 2022)

👋It’s been a while! The dynamic on X left little choice…

For this new/first post, I’ll summarize the key insights from my first published paper🎉, with Isabelle Mejean in the Paris Report @cepr.org @bruegel.bsky.social, edt by @pisaniferry.bsky.social, B. Weder di Mauro & @jzettelmeyer.bsky.social👇