PRODUCTIVE INTEGRATION AND THE RETENTION OF ECONOMIC GAINS
EVIDENCE FROM BRAZIL–EUROPEAN UNION PRODUCTION NETWORKS
DOI:
https://doi.org/10.26767/colquio.23.4359Keywords:
Productive integration, global value chains, interregional input–output analysis, European Union, economic spilloversAbstract
This study examines productive integration between Brazil and the European Union, focusing on the retention of economic gains generated through international production networks. Although participation in global value chains can expand production and trade, the associated economic benefits are not necessarily distributed evenly among participating countries. In this context, the study aims to identify the sectors responsible for transmitting economic effects between Brazil and the European Union and to assess the domestic retention of production, income, and fiscal gains. The analysis is based on the construction of an interregional input–output matrix derived from the OECD Inter-Country Input–Output (ICIO) database for 2022, in which European Union member states are aggregated into a single economic region. Production, value-added, and tax multipliers were estimated and decomposed into domestic and interregional components to measure cross-border spillover effects. The results reveal a heterogeneous pattern of productive integration across sectors. Industries related to transport equipment, shipbuilding, air transport, and motor vehicles exhibit the strongest spillover effects toward the European Union, reflecting their deep integration into international production networks. In contrast, service-oriented activities such as education, real estate, and financial services display high levels of domestic retention of economic gains. The findings suggest that participation in international production networks does not necessarily imply proportional retention of income and fiscal benefits, highlighting the importance of distinguishing between production expansion and domestic capture of economic gains when evaluating the effects of international economic integration.
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