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An enhanced methodology to monitor the EU’s strategic dependencies and vulnerabilities

Author

Listed:
  • Arjona, Román

    (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME, Chief Economist Unit)

  • Connell, William

    (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME, Chief Economist Unit)

  • Herghelegiu, Cristina

    (European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SME, Chief Economist Unit)

Abstract

This article develops an enhanced bottom-up and data-driven methodology to detect EU strategic dependencies using highly disaggregated product-level trade data. It identifies 204 products in sensitive industrial ecosystems where the EU experiences an important level of foreign dependencies. A subset of these products are then identified as particularly problematic given that their world trade networks can experience Single Point of Failures (SPOF). Since dependent products bear important risks in the event of unexpected disruptions, identifying them is the first step towards building resilience. Consequently, this analysis provides evidence based solutions to the EU’s open strategic autonomy agenda, including the efforts to diversify EU supply chains, to pursue partnerships with like-minded partners, and to strengthen the EU’s internal industrial capacity.

Suggested Citation

  • Arjona, Román & Connell, William & Herghelegiu, Cristina, 2023. "An enhanced methodology to monitor the EU’s strategic dependencies and vulnerabilities," Single Market Economics Papers WP2023/14, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.
    • Handle: RePEc:bda:wpsmep:wp2023/14
    DOI: 10.2873/768035
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    References listed on IDEAS

    as
    1. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    2. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    3. DACHS Bernhard & NEULÄNDTNER Martina & STEHRER Robert, 2022. "The EU and Global Production Networks: The Length of Value Chains, Patterns and Dynamics of Industrial Ecosystems," JRC Research Reports JRC130873, Joint Research Centre.
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    Cited by:

    1. Ludovic Panon & Laura Lebastard & Michele Mancini & Alessandro Borin & Peonare Caka & Gianmarco Cariola & Dennis Essers & Elena Gentili & Andrea Linarello & Tullia Padellini & Francisco Requena & Jaco, 2024. "Inputs in Distress: Geoeconomic Fragmentation and Firms’ Sourcing," Working Papers 2436, Banco de España.

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    More about this item

    Keywords

    dependencies; supply chain disruptions; single points of failure; substitutability; trade networks; early warning;
    All these keywords.

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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