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Inputs in distress: Geoeconomic fragmentation and firms’ sourcing

Author

Listed:
  • Panon, Ludovic
  • Lebastard, Laura
  • Mancini, Michele
  • Borin, Alessandro
  • Tofani, Peonare Caka
  • Cariola, Gianmarco
  • Essers, Dennis
  • Gentili, Elena
  • Linarello, Andrea
  • Padellini, Tullia
  • Requena, Francisco
  • Timini, Jacopo

Abstract

This paper studies the short-run economic impact of unanticipated disruptions to inputs potentially critical for domestic production and the green transition, and prone to geopolitical weaponisation (Foreign Critical Inputs - FCIs). Using firm-level customs and balance-sheet data for Belgium, France, Italy, Slovenia, and Spain, we find that a 50% reduction in FCI imports from China-aligned countries could lead to an average decline in manufacturing value added of 2.7% across the five countries. The impact, however, is highly uneven across firms, sectors, and regions. These findings highlight that supply disruptions in FCIs can impose substantial short-run economic costs.

Suggested Citation

  • Panon, Ludovic & Lebastard, Laura & Mancini, Michele & Borin, Alessandro & Tofani, Peonare Caka & Cariola, Gianmarco & Essers, Dennis & Gentili, Elena & Linarello, Andrea & Padellini, Tullia & Requena, 2026. "Inputs in distress: Geoeconomic fragmentation and firms’ sourcing," European Economic Review, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:eecrev:v:187:y:2026:i:c:s0014292126000991
    DOI: 10.1016/j.euroecorev.2026.105355
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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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