Economics serving society

(IPP Policy Brief n°53) Propagation of shocks in global value chains: the coronavirus case

References: IPP Policy Brief n°53, March 2020 - Authors: Elie Gerschel, Alejandra Martinez, Isabelle Mejean

Before spreading globally, the Covid-19 epidemic was concentrated in the Hubei province. To contain the spread of the virus, the Chinese government has imposed quarantine measures and travel restrictions, entailing the slowdown of economic activity. We study the propagation of this geographically concentrated productivity slowdown to the global economy, through global value chains. Reliance on Chinese inputs has dramatically increased since the early 2000s. As a consequence, most countries are exposed to the Chinese productivity slowdown, both directly through their imports of Chinese inputs and indirectly, through other inputs themselves produced with some Chinese value added. This note aims at quantifying the total exposure of France compared to other countries. First, we compute the share of Chinese value added in French production. Then, we use data at the country and sector levels to quantify the impact of travel restrictions on French GDP.

This policy brief is available on the IPP website

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