---
title: "Geoeconomic Shocks and Finland’s Position in Global Value Chains"
authors:
  - name: "Wang, Maria"
    url: "https://www.etla.fi/henkilot/wang-maria/"
    sameAs:
      - "https://orcid.org/0000-0001-8133-1108"
date_published: "2026-08-26"
series: "ETLA Working Papers"
series_number: "144"
issn:
  - "2323-2420"
  - "2323-2439"
jel_codes:
  - "F13"
  - "F14"
  - "F51"
language: "en"
publisher: "ETLA Economic Research"
pdf_url: "https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-144.pdf"
keywords:
  - "Geopolitical risk"
  - "Gravity model"
  - "Trade restrictions"
  - "Supply-chain vulnerability"
  - "Economic security"
  - "Finland"
identifier: "https://www.etla.fi/julkaisut/id/ETLA-Working-Papers-144"
abstract: "This paper studies how geoeconomic shocks affect bilateral trade, and what they imply for the position of a small open economy in global value chains. It combines monthly UN Comtrade imports at the 4-digit HS level for 2015–2024 with measures of import and export restrictions from the Global Trade Alert database and the country-level geopolitical risk index of Caldara and Iacoviello (2022). The estimation uses a two-stage structural gravity model: a first stage estimated by Poisson pseudo-maximum likelihood with reporter-partner-product, reporter-product-time and partner-product-time fixed effects, and a second stage relating the recovered multilateral resistance components to geopolitical risk. Direct policy restrictions carry the larger effect: an additional import restriction is associated with roughly 16 percent lower bilateral trade and an additional export restriction with roughly 3 percent. Geopolitical risk in the partner country is associated with a more moderate reduction, and the association is about forty percent larger on the subsample of structurally vulnerable products, defined by concentrated sourcing, reliance on non-EU suppliers, and limited substitutability. Such products account for a stable 28–30 percent of Finland’s goods imports over the period."
---

# Geoeconomic Shocks and Finland’s Position in Global Value Chains

**Published:** 2026-08-26  
**Categories:** Working Papers  
**URL:** https://www.etla.fi/en/publications/working-papers-en/geoeconomic-shocks-and-finlands-position-in-global-value-chains/

#### Abstract

This paper studies how geoeconomic shocks affect bilateral trade, and what they imply for the position of a small open economy in global value chains. It combines monthly UN Comtrade imports at the 4-digit HS level for 2015–2024 with measures of import and export restrictions from the Global Trade Alert database and the country-level geopolitical risk index of Caldara and Iacoviello (2022). The estimation uses a two-stage structural gravity model: a first stage estimated by Poisson pseudo-maximum likelihood with reporter-partner-product, reporter-product-time and partner-product-time fixed effects, and a second stage relating the recovered multilateral resistance components to geopolitical risk.

Direct policy restrictions carry the larger effect: an additional import restriction is associated with roughly 16 percent lower bilateral trade and an additional export restriction with roughly 3 percent. Geopolitical risk in the partner country is associated with a more moderate reduction, and the association is about forty percent larger on the subsample of structurally vulnerable products, defined by concentrated sourcing, reliance on non-EU suppliers, and limited substitutability. Such products account for a stable 28–30 percent of Finland’s goods imports over the period.

---

## Additional Information

**Saatavuus:** 2

**Issn:** 2323-2420, 2323-2439 (Pdf)

**Sarja Nro:** 144

**Sarja:** ETLA Working Papers

**Kieli:** en

**Sivuja:** 18

**Paivays:** 26.08.2026

**Jel:** F13, F14, F51

**Key Words:** Geopolitical risk, Gravity model, Trade restrictions, Supply-chain vulnerability, Economic security, Finland

**Lataa Pdf:** https://www.etla.fi/wp-content/uploads/ETLA-Working-Papers-144.pdf

**Kansikuva:** https://www.etla.fi/wp-content/uploads/etla-working-papers-144-kansi.jpg

**Kirjoittajat:** Wang, Maria

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