Regional inequalities in the age of nearshoring

Abstract

While the literature is rich in anecdotal cases of firms going through nearshoring strategies, understood as the relocation of production inputs in a geographically closer area, a study on the macroeconomic effects of nearshoring at regional level, in terms of both growth and regional inequalities, is still missing. Instead, understanding the potential regional variations in the outcomes of nearshoring practices is crucial for policymakers and stakeholders aiming to strike a balance between the imperative of strategic autonomy and the need to address existing regional disparities. The paper picks up such a challenge and, once nearshoring has been defined at the macroeconomic level as a process according to which the EU relative to extra‐EU inputs ratio increases, compared with a reference period in the past, it analyses regional inequality effects of such a phenomenon in Europe. The results show that nearshoring turns out to be notably diverse and contingent upon the efficiency gains the target regions offer. In some cases, it produces potential adverse consequences, going against the already complex process of decreasing regional disparities.