Value chains, international trade, and vulnerability of the economy (Etlatieto Oy)
Research group: Business renewal Research began: 2020 Research ends: 2021 Sponsored by: Prime Minister's Office (VN TEAS funding)

Responsible for research:

Value chains, international trade, and vulnerability of the economy (Etlatieto Oy)

Value chains, international trade, and vulnerability of the economy (Etlatieto Oy)

The functioning of international trade is important for small open economies such as Finland. Changes in international trade shakes the Finnish economy, and due to our export structure, the economic swings are potentially greater than in many other countries. The Corona crisis has also revealed how dependent Finland is on global value chains. The trade war between China and United States also casts a shadow over the development of international trade.

Corona crisis has also raised a concern of social and economic resilience. This has created a need for information on how this resilience – especially in international trade – could be strengthened. In addition, the trends in value chains are partly uncertain.

This research project studies the development trends of international trade, the factors affecting them and Finland’s sensitivity to shocks in international economy. The project will provide new information especially on the development and cyclical sensitivity of international trade in value chains. The aim is to produce recommendations either on national or EU level on how to improve the resilience of the economy to crisis and reduce cyclical sensitivity.

Finland’s cyclical sensitivity, the factors behind it and the role of value chains as a transmission channel for the crisis are studied using statistical methods. To analyze the future of value chains, company surveys and interviews are used. A special target group for the interviews are companies’ sourcing directors and supply chain managers.

The results of the project will be published in a final report, which will be published in Prime Minister’s Office Publication Series.

Research questions

  • How has the Corona crisis been reflected in international value chains and what kinds of long-term effects it may have?
  • What factors drive value chains to change or stay the same?
  • In addition to the crisis, what are other factors affecting foreign trade, especially from Finland’s point of view?
  • What special features of the economy, and especially related to foreign trade, have significantly affected the Corona crisis in Finland?
  • Can the Finnish economy be considered particularly vulnerable to external shocks such as Corona crisis?
  • Have the developments in sight already reduced Finland’s vulnerability?
  • How could economic resilience be strengthened, particularly in terms of foreign trade?

Responsible for research: