Spanish Regions in Global Value Chains: How Important? How Different?

Abstract

The recent release of EUREGIO, a novel global input-output database with regional detail for EU countries, allows to analyze the participation of EU regions in Global Value Chains and their implications for the propagation of sector-specific shocks. We focus on Spanish regions to exploit the granular information embedded in this database. We first characterize foreign and domestic trade inter-linkages of Spanish regions and sectors. Using an extended version of the Leontief scheme, we compute upstream output and value added multipliers. Then, we calculate indicators developed in the Global Value Chain literature to breakdown each region trade flows, both exports and outflows, into value added components. Finally, by means of examples, we analyze the role of networks (domestic or foreign) in the propagation of demand shocks (from customers to suppliers), to evaluate the heterogeneous impact across regions and to illustrate the potential of this approach. Our findings indicate that Spanish regions participate differently in Global Value Chains and this fact may have important implications in the propagation of shocks. According with our results, the strongest user-supplier linkages are usually within the same sector, and, in general, with industries within the same region or other Spanish regions. The Basque Country is the region with sectors with the largest total output-multipliers and Catalonia with the lowest ones. Concerning their participation in Global Value Chains, the Basque Country is the most integrated region in the backward segment of the value chain, closely followed by Madrid, while Catalonia –and a lesser extent Canary Islands– shows a comparatively low participation. Concerning the forward participation, Catalonia shows the largest one on exports, while Madrid and the Basque Country in outflows.