Exposure of supply and demand across global value chains: Euro-Mediterranean countries during COVID – Ayadi – – The global economy

This article attempts to examine how the COVID-19 shock affects different countries through their regional integration and exposure to global value chains (GVCs). Using input-output tables (EORA 2016), our contribution is threefold. First, based on Pahl et al. (2021), we conceptually revise the approaches to analyze input-output relationships. We emphasize the difference between bilateral flows of value added and trade and distinguish between producers and consumers of value added. Second, we distinguish the supply and demand channels through which these countries may be affected by GVC disruptions. Third, we apply this empirical exercise to a little studied region, namely the Mediterranean region which is characterized by its involvement in several trade agreements that could stimulate their integration into GVCs. Our main findings show that, first, most countries have relatively stronger backward linkages to GVCs than downstream. Second, on the northern shore of the Mediterranean, Italy and France are net suppliers of added value since they produce more added value absorbed abroad than the foreign added value they consume. Third, our results also highlight the limited integration between partners on the southern shore, whose integration is almost entirely dictated by ties with developed countries in southern Europe.

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