Factory Europe and its Ties in Global Value Chains

Summary:

How is Europe integrated in today’s global value chains? What are potential challenges and risks European countries face with their specific position in globalised trade? These are the key questions being addressed in the new GED study with the Cologne Institute for Economic Research.

Global value chains have continued to expand over the last few decades. This has made them a central part of many companies’ internationalization strategies and an important facet of globalization. However, catchwords such as offshoring, bazaar economy and relocation of production have also caused this trend to become a focus of globalization critics. Above all in the United States under the new government, but also in France and other parts of Europe, this skepticism is playing an important role.

However, partnerships on the production side offer great opportunities to take advantage of the international division of labor. This applies not only to the inner-European ties in the EU Single Market. Intermediate consumption networks between Germany and the United Kingdom (UK) are also very close and placed at risk due to the Brexit. Something similar applies to the transatlantic ties on the production side. A protectionist backlash against globalization and offshoring would therefore threaten an important source of prosperity in regard to European and global value chains.

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