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Trade Liberalization in APEC and Global Value Chain Participation: What Can Value Added Indicators Tell?

Author

Listed:
  • Flaig, Dorothee

    (Hohenheim University)

  • Greenville, Jared

    (Australian Bureau of Agricultural and Resource Economics and Sciences)

Abstract

Global value chains (GVCs) a re an increasingly important driver of world t rade, and they are relevant in analyzing border policies and trade agreements. Combining methods of value added decomposition and a computable general equilibrium model, we show how tariff liberalization in APEC impacts on measures of integration. The trade agreement increases GVC integration worldwide irrespective of membership. The effects differ by type of integration, namely, forward or backward, depending on the source of intermediate inputs, the membership of countries up- and downstream the supply chain, and the border protection in the base. The analysis reveals some limitations of the presented integration measures in a dynamic context. First, value added incorporates income related to policy measures, and decreasing integration can reflect a lower tax burden and a more efficient network. Second, changes do not allow interpreting the size of effects of underlying variables, and similar changes can result from various underlying developments.

Suggested Citation

  • Flaig, Dorothee & Greenville, Jared, 2021. "Trade Liberalization in APEC and Global Value Chain Participation: What Can Value Added Indicators Tell?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 36(2), pages 308-338.
    • Handle: RePEc:ris:integr:0829
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    Cited by:

    1. Himanshu Jaiswal & A. Ganesh Kumar, 2024. "A New mechanism for trade agreements to revitalize the global value chains," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2024-001, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    GVCs; Value added indicators; trade agreement; APEC;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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