The exacerbation of the economic shock caused by the fragmentation of value chains

As lockdown measures become more widespread, global economic activity is contracting sharply. In addition to the direct impact of factory closures and other disruptions to business activity, we show that the effect of these measures on firm productivity is significantly amplified by the fragmentation of value chains at both national and international levels. In France, the propagation of shocks through the value chain could more than double the immediate impact of lockdown measures on firm activity.