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Vertical gravity

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  • Brooks, Douglas H.
  • Ferrarini, Benno

Abstract

Vertical gravity deploys as the dependent variable a newly developed indicator of production sharing and processing trade among country pairs. The intensity of this relationship among 73 countries between 1998 and 2005 is assessed in a standard fixed-effects panel setting, with particular focus on trade policy. We find that joint adherence to a preferential trade agreement is associated with a considerably higher degree of processing trade among country pairs, and that such trade is also premised on a lower tariff environment compared to countries that integrate less strongly.

Suggested Citation

  • Brooks, Douglas H. & Ferrarini, Benno, 2014. "Vertical gravity," Journal of Asian Economics, Elsevier, vol. 31, pages 1-9.
    • Handle: RePEc:eee:asieco:v:31-32:y:2014:i::p:1-9
    DOI: 10.1016/j.asieco.2014.02.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Global value chains; Vertical trade; Gravity analysis; Factory Asia;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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