Nearshoring and Farsharing in Europe within the Global Economy

Filippo Bontadini, Valentina Meliciani, Maria Savona, Ariel Wirkierman

EconPol Forum 23 (5), 37-42

  • We distinguish the geographical source and destination of value added contributed by each country-industry to each country-global-value-chain (GVC) from both input sourcing and output destination perspectives
  • We define indicators that capture the relative intensity of regional vis-à-vis global (i.e., extra-regional) components of foreign value added and employment
  • Europe is increasingly sourcing value added from within the region (“nearshoring”) but exporting value added globally (“farsharing”)
  • European GVCs mostly generate foreign employment outside Europe. In contrast, most of European employment is activated by European GVCs: an important labor market policy implication arguing for more intensive intra-EU trade and integration
  • Europe and its economic policy should not only focus on the sourcing of value added across production processes, but also on the final demand that generates economic activity in Europe