(Work Package 5)

Multinational Enterprises (MNEs) and the Global Value Chains (GVCs) on which they rely have long been central to Europe’s economic landscape. Their expansion has had significant impacts on regional growth, productivity, and competitiveness. However, recent geopolitical disruptions, technological shifts, and the growing recognition of the need for supply chain resilience have led to major transformations in how firms operate within GVCs. MNEs and the many small companies within their value chains are restructuring their operations and their inter-firm relations. These changes are disruptive, but they also create opportunities to strengthen local-global linkages and synergies. In this policy brief we will explore how our research sheds lights on these dynamics and what lessons emerge for EU policy making going forward.

As outlined by the recent report by Mario Draghi, the EU faces many challenges in sustaining its long term competitiveness while also ensuring economic security and strategic autonomy. In our parallel policy briefs on Work Packages (WP) 3 and 4 of the TWIN SEEDS project, we explored the policy implications of our work from the point of view of social, regional and environmental aspects of GVC reconfiguration. Although these policies can also contribute to building a more sustainable and competitive EU economy, in this brief we focus on the findings of Work Package 5 (WP5), which addressed more specifically questions related to sustaining and strengthening the EU’s industrial competitiveness in the face of the shifts in the ‘Twin Seeds’ – technological and geo-political developments.

Although the context has changed markedly since the project started in 2022, especially in terms of the geo-political landscape, many of our findings can nevertheless inform vital contemporary policy debates. Most notably, although our research underlined some of the key economic difficulties facing the EU, it also suggests opportunities for the Union and its enterprises as they navigate these transformations. This policy brief outlines potential strategies for enhancing EU competitiveness which emerge directly from our research. These focus on three critical areas: improving resilience and productivity within GVCs, fostering innovation through knowledge diffusion, and supporting balanced regional development through strategic industrial policies.