Investigating automotive in Europe: supply chain vulnerability, capabilities and export specialisation

Type de publication:

Conference Paper

Source:

Gerpisa colloquium (2024)

Résumé:

This research aims at investigating the automotive sector in Europe 27 and in the regions integrated with it, by focusing on the fragmentation of production along supply chains and by emphasising the capabilities embedded in each country’s production, import and export of automotive goods and related products building on a flourishing literature assessing automotive production networks (Pavlinek, 2020; Fana and Villani, 2022; Russo et al., 2023). Our research is based on various data and methodologies.

First, we adopt Input-Output (I-O) analysis (Miller and Blair 20022) by means of the OECD ICIO (2023 Release) database to determine the fragmentation of European automotive. That is, we analyse the vertically integrated automotive sector (i.e., its global value chain dimension) related to European final motor vehicles production – in addition to specific within EU countries’ cases - to measure, on the one hand, the heterogeneous role of suppliers (in both country and sector dimensions) and on the other hand to assess how final demand activates all the inputs in the chain.

Secondly, we take advantage of product level data (import and export), given by the UN COMTRADE database and 6-digit HS07 product classification, to add a more granular dimension of import and export patterns of European automotive. In addition, UN COMTRADE gross export is used to construct Economic Fitness and Complexity (EFC) (Tacchella et al 20212), a useful toolbox that informs on the specialisation of countries, their hidden capabilities and growth potential. With this respect we propose a decomposition of Fitness measure in components that reflect product categories (the OECD End-Use categories) – as consumption, intermediate or capital goods – to better inform on the upstream vs. downstream positioning along value chains. EFC methods are also used to assess the product progression network and the relatedness of products to identify new, statistically validated entry points for the automotive sector.

A crucial step is represented by selecting the HS 6-digit products that belong to the automotive supply chains. We leverage on the lists proposed in the literature by Turkan (2009), Amighini and Gorgoni (2014) and Blazquez & Gonzalez-Diaz (2016) – among others – but we refine them with an empirical validation made possible by taking advantage of the Istat Coweb dataset of imports and exports of products by Italian firms belonging to automotive sector.

In the second part of the research, we focus on the aspects related to the green transition.
Indeed, in today's landscape, the automotive industry is undergoing a significant productive reorganization due to the transformations related to green and digital transition. Each vehicle-producing entity is strategically choosing specific technologies, either increasing or reducing dependence on third countries for crucial inputs or materials. While standard I-O tables may not provide a way to disentangle sectoral flows, EXIOBASE I-O tables have the advantage of disaggregating many sectors related to mining, energy, and raw materials. This I-O analysis is then enriched with an assessment of the specialization in electric vehicle (and related components) with UN COMTRADE and HS17 product classification (for which we convert the automotive list of HS07 products), which allows for specifically accounting for such disaggregated commodities not included in previous HS classifications.

The aim of this research is to shed light on the specialization, the diversification opportunities and the vulnerabilities of EU countries in the automotive production network by providing a detailed picture based on information coming from export, import and industrial interdependencies at various levels of aggregation.

References

Amighini, A., & Gorgoni, S. (2014). The international reorganisation of auto production. The World Economy, 37(7), 923-952.

Blázquez, L., & González-Díaz, B. (2016). International automotive production networks: How the web comes together. Journal of Economic Interaction and Coordination, 11, 119-150.

Fana, M., & Villani, D. (2022). Decomposing the automotive supply chain: employment, value added and occupational structure. Structural Change and Economic Dynamics, 62, 407-419.

Miller E.R. and Blair P.D. (2022). Input-Output Analysis: Foundations and Extensions. Cambridge University Press

Pavlínek, P. (2020). Restructuring and internationalization of the European automotive industry. Journal of Economic Geography, 20(2), 509-541.

Russo, M., Alboni, F., Sanginés, J. C., De Domenico, M., Mangioni, G., Righi, S., & Simonazzi, A. (2023). Regionalisation and cross-region integration. Twin dynamics in the automotive international trade networks. Structural Change and Economic Dynamics, 67, 98-114.

Tacchella, A., Cristelli, M., Caldarelli, G., Gabrielli, A., & Pietronero, L. (2012). A new metrics for countries' fitness and products' complexity. Scientific reports, 2(1), 723.

Türkcan, K. (2009) : Vertical Intra-Industry Trade: An Empirical Examination of the Austria's Auto-Parts Industry, FIW Working Paper, No. 30, FIW – Research Centre International Economics, Vienna

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