How to De-risk: European Economic Security in a World of Interdependence
Pandemic-related supply disruptions, theenergy crisis provoked by Russia’s invasion of Ukraine and economic coercion byChina have put economic security high on the European Union policy agenda. Intheir Policy Brief for
Bruegel, Jean Pisani-Ferry, BeatriceWeder di Mauro, and Jeromin Zettelmeyer discuss how the EU should ‘de-risk’ its external economic relationshipswithout foregoing the benefits of trade. The authors argue that both ‘misseddependencies’ and ‘false positives’ are inevitable. Also, external shocks andcoercion could be propagated through exports, productive assets held abroad andfinancial channels as much as through imports. The standard answer is that theEU should identify product-level trade dependencies, mainly on the import side,and reduce them, mainly through diversification of suppliers, while otherwisemaintaining maximum trade integration.
https://www.bruegel.org
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