This paper documents recent trends in the geographical distribution of value added across Global Value Chains (GVCs). By combining the industry (i.e., source) and value chain (i.e., destination) analytical perspectives, we find two concurrent processes setting Europe’s participation in GVCs apart from other two macro-regions, Asia-Pacific and the Americas. European value chains have recently increased the share of value added they import from within Europe — which amounts to nearshoring — while European country-industries have, from a long-period perspective, increased the share of value added they provide to extra-European value chains — which we refer to as farsharing. We study these trends by decomposing regional dynamics into structural components, zooming in to Europe to highlight country- and sector-level patterns. Crucially, if global final demand decelerates, the positive intra-European spillovers due to regional backward linkages (nearshoring-induced effects) might not become as effective as they could potentially be, given that activating European production increasingly requires extra-European final demand (the farsharing constraint).

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