EconPol Europe: Evidence-Based Policy Debate

Military goods from the EU are continuing to reach Russia via third countries – despite the extensive sanctions. More than a third (36%) of the sanctioned goods that reach Russia are transported via Turkey. China accounts for almost a quarter (23%), followed by Hong Kong (16%), and the United Arab Emirates (10%). “Since the beginning of 2024, the EU has significantly tightened and expanded export bans to Russia. As a result, we are seeing less circumvention of sanctions via third countries, even though sanctioned military goods from the EU are still reaching Russia via roundabout routes,” explains ifo trade expert Feodora Teti.

As geopolitical tensions rise, Europe’s dependency on imported semiconductors has moved to the center of policy debates. The EU Chips Act was designed to address this vulnerability by strengthening Europe’s role in the global semiconductor ecosystem. Yet several years into the initiative, it is becoming clear that it has been a failure. In a recent Opinion, Clemens Fuest, Oliver Falck, and Daniel Gros analyze Europe’s dependency on imported semiconductors. They argue that a more focused EU Chips Act and a stronger use of Europe’s strategic strengths would improve resilience.

Research and development in semiconductor technology is increasingly being carried out outside Europe, in particular in Asia. Between 2000 and 2021, Japan accounted for a third of all semiconductor patents (35%), followed by the US (18%) and South Korea (15%). EU countries account for a total of around 10% of all semiconductor patents. “At the beginning of the 2000s, the EU was still ahead of Taiwan and China in semiconductor research. However, Asian countries have made significant gains since then, while patent applications in Europe have declined,” explains ifo researcher Oliver Falck.