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Global Value Chains and Deep Integration (anglais)

How does trade affect the design of preferential trade agreements (PTAs)? What is the role of global value chains (GVCs)? The authors answer these questions by empirically investigating the causal impact of gross and value-added trade on the depth of PTAs. To solve the critical issue of endogeneity of trade flows for trade policy, the identification strategy exploits a recent transportation shock: the sharp increase in the maximum size of container ships, which has more than tripled between 1995 and 2007. The key variation in our instrument hinges on the fact that only deep-water ports can accommodate new larger ships. The strategy is flexible enough to generate excludable instruments for different value-added components of exports. This allows us to assess how the design (depth) of PTAs is affected not only by gross exports but more specifically by GVC-trade as captured by indicators of trade in domestic and foreign value added. The authors find that trade occurring through GVCs increases the probability of forming deep PTAs, i.e., agreements that include provisions that go beyond the coverage of the WTO. These GVC-trade effects are larger than those of gross exports, which include flows that are unrelated to GVCs. The results indicate that GVCs are one important driver of deep preferential liberalization.

Information

  • Auteur

    Baccini,Leonardo, Fiorini,Matteo, Hoekman,Bernard M., Altomonte,Carlo, Colantone,Italo

  • Date du document

    2021/03/25

  • Type de document

    Document de travail de recherche sur les politiques

  • Numéro du rapport

    WPS9598

  • Volume

    1

  • Total Volume(s)

    1

  • Pays

    Monde,

  • Région

    Région,

  • Date de publication

    2021/03/25

  • Disclosure Status

    Disclosed

  • Titre du rapport

    Global Value Chains and Deep Integration

  • Mots clé

    trade and investment; global value chain; trade agreement; foreign value added; development research group; gross exports; value-added trade; foreign direct investment; domestic value; sample period; value added trade; domestic value added; multilateral trade policy; bilateral investment treaty; preferential trade agreement; dispute settlement mechanism; regional trade agreement; state trading enterprise; container ship; removal of trade; agreement on trade; preferential market access; linear probability model; Research Support; free trade agreement; trade and growth; intellectual property rights; preferential trade liberalization; inclusion of provision; presence of binding; recent studies show; trade and fdi; value of trade; investment and services; bilateral trade relationship; international trade agreement; regional trading arrangements; economies of scale; large ship; standard error; Trade Policies; preferential liberalization; traded sector; time t; container terminal; partner country; global production; deep integration; standard deviation; water depth; estimation result; policy relationship; trade datum; gravity model; causal impact; point estimate; conceptual framework; instrumental variable; open access; exclusion restriction; empirical analysis; equitable treatment; labour right; foreign content; investment chapter; preferential basis; future research; empirical exercise; fair treatment; vertical specialization; cargo capacity; public policy; multiple sources; foreign component; raw data; investment liberalization; empirical literature; domestic content; technological innovation; several reasons; across border; foreign market; investment policy; provision level; direct competitors; Political Economy; investment protection; empirical evidence; trade activity; lower price; destination country; central planner; human rights; optimal policy; shallow integration; market operator; interest group; empirical support; trade intensity; economic integration; short term consultant; protectionist policy; environmental sustainability; research assistance; trade rule; empirical regularity; causal linkage; causal relationship; state enterprises; reciprocal commitment; transportation cost; increasing specialization; supply chain; national production; political pressure; trade flow; production network; global trade; trade effect; Trade Linkages; general equilibrium; political science; development policy; international cooperation; exogenous shock; aggregate measure; Transport Technologies; recent years; investment provisions; regression equation; summary statistic; regression analysis; baseline estimates; policy uncertainty; endogeneity issue; market opening; technological change; high trade; unilateral trade; distribution activity; foreign supplier; trade dimension; robustness check; production cost; regulatory regime; cross-border production

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