From Offshoring to Back-shoring: Quantitative Drivers of Firms’ Strategic Reconfiguration in Global Production Networks

Details

Supervisors

Agrell, Per Joakim

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

enWhy do European firms bring production back home — and why do they stop? For three decades, offshoring to China was the default strategy. That picture has changed. Chinese wages have nearly doubled, robots are transforming European factories, and successive crises — COVID, Ukraine, US-China tensions — have exposed the fragility of global supply chains. In response, a growing number of European manufacturers have begun reshoring production. Yet the trend is puzzling. European reshoring peaked in 2017 and has been declining ever since, while US reshoring accelerates. Why the divergence, if the global pressures are identical? This thesis provides the first systematic quantitative answer. Estimating a panel data model across 12 European countries from 2016 to 2024, it simultaneously tests three drivers: wage convergence with China, automation intensity, and geopolitical risk exposure. The results are clear-cut. Automation — not geopolitical risk — is the dominant predictor of European reshoring. Highly robotised economies attract significantly more production returns, regardless of the wage differential. Strikingly, geopolitical risk has failed to trigger a reshoring wave in Europe, unlike in the US where large-scale industrial policy made the difference. The conclusion is sobering: reshoring is not automatic. It requires pre-existing automation capacity, and without proactive industrial policy, geopolitical awareness does not translate into concrete relocation decisions.