DIGITAL CAPITAL AND REGIONALISATION OF EU INDUSTRIAL VALUE CHAINS AMID GLOBAL TRANSFORMATIONS

Abstract

The paper examines whether digital capital is associated with a stronger response of intra-EU than extra-EU global value chain (GVC) linkages in European manufacturing. The study formally tests whether the elasticity of intra-EU GVC-related trade with respect to digital capital exceeds the corresponding extra-EU elasticity and compares the causal estimate with post-shock FIGARO dynamics. The empirical core is a quantitative re-analysis of published country–industry estimates obtained by two-stage least squares with instrumental variables (2SLS-IV) for nine European economies and manufacturing industries in 2005–2018. The study independently reconstructs 95% confidence intervals, the p-value of the spatial contrast, and the covariance implied by the reported standard errors. Post-shock dynamics are evaluated using European Commission calculations based on FIGARO and the Eurostat Global Value Chain Survey for 2021–2023. The regionalisation coefficient is 0.669 with a standard error of 0.160 and a reconstructed 95% confidence interval of 0.355–0.983. The test yields z=4.181 and p=0.000029, rejecting equality of intra-EU and extra-EU responses at p<0.001. The intra-EU coefficient is 0.823 (SE=0.188; 95% CI 0.455–1.191), whereas the extra-EU coefficient is 0.154 (SE=0.191; 95% CI −0.220–0.528), leaving the separate extra-EU response statistically uncertain. European Commission estimates based on FIGARO show the share of intra-EU GVC-related flows rising from 58% of total EU exports in 2019 to 60% in 2023. The Eurostat survey reports stronger digitalisation of GVC processes for 32% of enterprises, searches for new suppliers or buyers within the EU for 29%, and expanded searches outside the EU for 17%. The spatial hypothesis is supported for the 2005–2018 causal specification, while the post-shock indicator of regionalisation moved in the same direction. The evidence characterises regionalisation rather than broad reshoring or disengagement from third countries. The contribution is a reproducible secondary statistical verification combined with an operational separation of regionalisation, localisation, external diversification, and supplier switching.