IDEAS home Printed from https://ideas.repec.org/p/glh/wpfacu/192.html
   My bibliography  Save this paper

Economic Costs of Friend-shoring

Author

Listed:
  • Beata S. Javorcik
  • Lucas Kitzmueller
  • Helena Schweiger
  • Muhammed A. Yildirim

    (Center for International Development at Harvard University)

Abstract

Geo-political tensions and disruptions to global value chains have led policymakers to reevaluate their approach to globalisation. Many countries are considering regionalisation and friend-shoring – trading primarily with countries sharing similar values – as a way of minimising exposure to weaponisation of trade and securing access to critical inputs. If followed through, this process has the potential to reverse global economic integration of recent decades. This paper estimates the economic costs of friend-shoring using a quantitative model incorporating inter-country inter-industry linkages. The results suggest that friend-shoring may lead to real GDP losses of up to 4.6% of global GDP. Thus, although friend-shoring may provide insurance against extreme disruptions and increase the security of supply of vital inputs, it would come at a significant cost.

Suggested Citation

Handle: RePEc:glh:wpfacu:192
as

Download full text from publisher

File URL: https://growthlab.cid.harvard.edu/files/growthlab/files/2022-09-cid-wp-422-friend-shoring.pdf
Download Restriction: no
---><---

More about this item

Keywords

Friend-shoring; Regionalisation; Global Trade and Production Network; International I-O Linkages;
All these keywords.

JEL classification:

  • F15 - International Economics - - Trade - - - Economic Integration
  • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
  • F60 - International Economics - - Economic Impacts of Globalization - - - General
  • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

Statistics

Access and download statistics

Corrections

All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:glh:wpfacu:192. See general information about how to correct material in RePEc.

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

We have no bibliographic references for this item. You can help adding them by using this form .

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chuck McKenney (email available below). General contact details of provider: https://growthlab.hks.harvard.edu/ .

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.