The Characteristics of Regional Value Chains in the Sector of Chemicals and Pharmaceutical Products in the EU

Ines Kersan-Škabić,Alen Belullo

doi:10.3390/economies9040167

Abstract

The COVID-19 pandemic has impacted trade flows, causing a trade drop in 2020 that was especially sensitive for pharmaceutical and medical products necessary to ensure public health. The production of pharmaceutical products is dispersed in a framework of global value chains. This study aimed to provide a detailed analysis of the EU situation in the sector of production of chemical and pharmaceutical products, to discover the fragmentation of production chains within the EU as well as globally. International inter-country input–output tables were employed to disaggregate the value-added created in EU member states. The GVC and RVC participation indexes, backward and forward participation, length of sourcing, and selling value chains were calculated and compared with the main global hubs.

Highlights

The motivation for doing this research was instigated by the COVID-19 pandemic and theavailability of pharmaceutical products in the EU
If we summarize by country the column of matrix Tv, we can derive the Bilateral value-added in production of chemicals and pharmaceutical products, or we can see how much of value-added is created by exports of the chemicals and pharmaceutical products sectors allocated in all sectors of different countries
This paper provides anin-depth in-depthanalysis analysisofofvalue-added value-addedchains chainswithin within member states, shed an member states, butbut alsoalso shed some someon light the global the trade of chemicals and pharmaceutical products

Summary

Introduction

The motivation for doing this research was instigated by the COVID-19 pandemic and the (un)availability of pharmaceutical products in the EU. The COVID-19 pandemic during 2020 and early 2021 impacted on the drop in international trade and in global value-chain activities, where countries and sectors are not in an equal position. Global production chains suffer from putting different restrictions on the movement of people that disrupt the transportation process, and, initially, some factories were closed for a period of time and employees stayed at home, so production was stopped. The interconnected producers in other countries or regions of the world were faced with an inability to obtain the production inputs on time, but they were pushed to temporarily close their production capacities as the pandemic spread around the world. The pandemic initiated many questions about the future of international trade and, even more often, about the future development of global value chains (Baldwin and Freeman 2020). Global value chains are facing different challenges: effectiveness vs. resilience and regionalization vs. globalization

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