This paper quantifies the impact on the value added of manufacturing firms from five EU countries (Belgium, France, Italy, Slovenia and Spain) of a possible decline in the supply of foreign critical inputs, at risk of disruption, from China and other China-aligned countries.
This paper finds that halving the imports of foreign critical inputs from China-aligned countries would result in a decrease in manufacturing value added of between 2 and 3 per cent for the five economies considered; the decline would be sharper in Italy and Slovenia. The most affected industries would be electronics, chemicals, and machinery and equipment.
