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Global Value Chains and Subnational Exposure to Geopolitical Tensions

Author

Listed:
  • Giorgia Giovannetti
  • Luca Lodi
  • Enrico Marvasi

Abstract

Geopolitical tensions are reshaping Global Value Chains (GVCs), yet little is known about the magnitude of these effects and, especially, how they translate into uneven exposures at the subnational level. This paper argues that subnational regions are a critical unit for understanding GVCs and their changes under geopolitical fragmentation. We develop a regional exposure index that links global sensitivities from structural gravity estimations of GVC-related trade with granular regional trade data. Evidence from Italian regions reveals pronounced heterogeneity in both upstream and downstream exposure, depending on sectoral specialization and partner composition. These findings suggest that geopolitical fragmentation not only reshapes GVCs but also reconfigures regional economic vulnerabilities, with direct implications for cohesion, competitiveness, and policy design.

Suggested Citation

  • Giorgia Giovannetti & Luca Lodi & Enrico Marvasi, 2026. "Global Value Chains and Subnational Exposure to Geopolitical Tensions," Working Papers - Economics wp2026_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2026_02.rdf
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    References listed on IDEAS

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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