Key findings

Global supply chains are changing, yet they remain as important as ever. Firms Adapt Supply Chains in Response to trade policy, geopolitical or environmental shocks – even short-term disruptions can lead to permanent changes in supply chains. Knowledge and Goods Flows Are Deeply Interconnected – not just at the economy wide level, but also for individual firms. Innovation Drives growth and Resilience — but Europe Faces challenges because of an over-reliance on multinational firms, and underperforming universities.

The lessons for policy

Policy fields are interconnected – trade policy is services policy is innovation policy. Europe needs to strengthen the diffusion of innovation across firms and regions using fiscal tools targeting universities, knowledge generators, and knowledge spillovers.