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Specialization within global value chains: The role of additive transport costs

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  • Lanz, Rainer
  • Piermartini, Roberta

Abstract

This paper studies the factors of comparative advantage within global value chains relying on a framework where comparative advantage is measured through the interaction of country and industry characteristics. We find that good institutions give a comparative advantage in the later stages of the production process, whereas good transport infrastructure gives an advantage in the early stages of production. We explain these results with a simple theoretical framework that shows how predicted patterns of specializations depend on whether trade costs are additive or multiplicative.

Suggested Citation

  • Lanz, Rainer & Piermartini, Roberta, 2018. "Specialization within global value chains: The role of additive transport costs," WTO Staff Working Papers ERSD-2018-05, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd201805
    DOI: 10.30875/f1276615-en
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    Cited by:

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    2. Roy, Martin, 2019. "Elevating services: Services trade policy, WTO commitments, and their role in economic development and trade integration," WTO Staff Working Papers ERSD-2019-01, World Trade Organization (WTO), Economic Research and Statistics Division.

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    More about this item

    Keywords

    global value chains; quality of transport infrastructure; quality of institutions; comparative advantage; upstreamness; production networks; trade costs;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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