Published: 03/10/2022

Russia’s invasion of Ukraine has been accelerating changes in the existing model of the functioning of the world economy. Supply chain resilience is gaining in importance. The EU is facing a major challenge of reducing its dependence. At present, 76 per cent of oil and 68 per cent of gas imports in the EU are from non-OECD countries. Simultaneously, for as many as 11 of the 30 raw materials critical to the energy transition, the EU’s dependence on imports exceeds 85 per cent. More than 7 per cent of EU imports are products with a high degree of dependence on deliveries from outside the EU-27, including over 4 per cent among key manufacturing ecosystems such as electronics, energy and health. The EU is also twice as dependent as the US on demand in non-OECD countries. Therefore, changes in the current supply chain seem necessary – according to the Polish Economic Institute’s report entitled ‘The decade of economic resilience. From offshoring to partial friendshoring’.

Economic resilience is not all

Ensuring ‘hard security’ is the most important task of states. Owing to Russia’s invasion of Ukraine, it is necessary to increase military spending for modernising armed forces and improving preparedness for various scenarios of international developments.

‘In making economic policy adjustments, it is vital to be aware that the arms industry is also subject to dependencies going beyond the EU Member States, or even beyond NATO allies or OECD members. It must also be remembered that increases in military spending will not only limit possible investment in other public sectors, but they will also reduce the economic opportunities to create incentives to secure supply chains. Improving the resilience of supply chains and taking care of ‘hard security’ will involve strict cooperation within the EU and among allies. Close cooperation is needed to reduce the exposure to dangerous dependencies in each country rather than only from the perspective of the EU’, summarises Łukasz Baszczak, an analyst of the behavioural economics team at the Polish Economic Institute.

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The Polish Economic Institute is a public economic think-tank dating back to 1928. Its research primarily spans macroeconomics, energy and climate, foreign trade, economic foresight, the digital economy and behavioural economics. The Institute provides reports, analyses and recommendations for key areas of the economy and social life in Poland, taking into account the international situation.

Media contact: Ewa Balicka-Sawiak Press Spokesperson T: 48 727 427 918 E: ewa.balicka@pie.net.pl