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Multinational network restructuring, geopolitical exposure, and home country effects – Evidence for European MNEs

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  • Merlevede, Bruno
  • Michel, Bernhard

Abstract

The slowdown in globalization has been analyzed primarily from the viewpoint of trade and aggregate investment. Based on a rich micro-level dataset of worldwide affiliate networks of European MNEs, we define an episode approach to (i) analyze the extent and direction of foreign network restructuring between 2010 and 2019, and (ii) estimate its effects on home-country activity. We find evidence of a strong rise in contraction episodes and a substantial fall in expansion episodes in the second half of this decade. Both contraction and expansion episodes have increasingly gone hand in hand with a reorientation towards geopolitically aligned countries (friendshoring) and a reduced geographic scope (nearshoring). We do not find any systematic increase in home-country activity for networks that contract abroad, neither along the extensive nor the intensive network margin. By contrast, foreign expansion episodes are associated with increased parent activity and a rise in the number of domestic affiliates.

Suggested Citation

  • Merlevede, Bruno & Michel, Bernhard, 2026. "Multinational network restructuring, geopolitical exposure, and home country effects – Evidence for European MNEs," Journal of International Economics, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:inecon:v:162:y:2026:i:c:s0022199626000905
    DOI: 10.1016/j.jinteco.2026.104300
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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