Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307349 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11419
Publisher: 
CESifo GmbH, Munich
Abstract: 
The world economy has become more and more globalized as firms have organized production along global value chains. But more recently, globalization has stalled. This paper shows that higher uncertainty, in combination with better automation technologies, has likely contributed to that trend reversal. We show that plausibly exogenous exposure to uncertainty in developing countries leads to reshoring to high-income countries, but only if industrial robots have made this economically feasible. In contrast, we find no strong evidence of nearshoring or diversification. We address concerns about reverse causality by showing that results hold when using two alternative identification strategies. In a narrative approach, we use only locally generated spikes in uncertainty, for which the narrative around the events suggest that they are plausibly exogenous. In a small open economy approach, we restrict the sample to small developed countries that are unlikely to cause uncertainty in the developing world. Moreover, we show that results are robust to the main threats to identification related to shift-share instruments.
Subjects: 
global value chains
uncertainty
automation
reshoring
shift-share design
JEL: 
F14
F15
F16
J23
Document Type: 
Working Paper
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