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Cutting through the Value Chain: The Long-Run Effects of Decoupling the East from the West

Author

Listed:
  • Gabriel J. Felbermayr
  • Hendrik Mahlkow
  • Alexander Sandkamp

Abstract

This Policy Brief analyses the long-run effects of an economic decoupling between the political West (i.e. the EU, the US and their allies) and the East (first and foremost Russia and China). A decoupling of Russia from the US and its allies would have much more severe long-term impacts for real income in Russia (minus 9.7 percent) than in the US and its allies (minus 0.2 percent). The reason for the uneven distribution of costs lies primarily in Russia’s low economic importance compared with the US and its allies.

Suggested Citation

  • Gabriel J. Felbermayr & Hendrik Mahlkow & Alexander Sandkamp, 2022. "Cutting through the Value Chain: The Long-Run Effects of Decoupling the East from the West," EconPol Policy Brief 41, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_41
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    File URL: https://www.ifo.de/DocDL/EconPol_Policy_Brief_41_Decoupling_0.pdf
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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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