Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235449 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9079
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
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.
Subjects: 
quantitative trade model
input-output linkages
global value chains
Covid-19
supply chain contagion
shock transmission
JEL: 
F11
F12
F14
F17
F62
Document Type: 
Working Paper
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