Italian Supply Backshoring and the relationship between Deglobalization, Decoupling & European Regionalization

For over a decade, the global economy has been experiencing a period of deglobalization, and the world's two major economies, namely the United States and China, have been undergoing a significant process of decoupling. These phenomena might be relevant also for other geographic areas, such as Europe, and possibly alter the economic interdependence between this area and the rest of the world. Similarly, the same phenomena might also contribute to reconfiguration of the global value chain, which, could result in a regionalization process at the European level, or in a backshoring processes at national level. We adopt an economic realism perspective and claim that, due to the institutional and political weaknesses affecting the European Union and its decision-making process, some of the main effects connected to deglobalization and decoupling will be more impactful at the national level. Accordingly, after finding partial evidence of the regionalization of the European trade flows, we investigate the backshoring of the supply chain in one of the most relevant European economies, i.e. Italy, aiming at identifying the main drivers as well as the relevant contingencies of this phenomenon. Our results suggest that supply backshoring is linked to the availability of suitable suppliers in the home country and to the decrease in the efficiency of global value chains; besides, firms with higher productivity or belonging to labor-intense sectors show a higher propensity to backshore their foreign supplies. We draw policy implications for both single countries and the European Union.