Bilateral value chain reshaping through regional trade agreements deepening: Evidence from belt and road countries

This paper investigates the impact of Regional Trade Agreements (RTAs) on the reshaping of value chains from both domestic and regional perspectives by using national-level data from the Belt and Road countries. The findings indicate that the depth of RTAs among Belt and Road countries can not only enhance regional integration characterized by regional value chain inter-connections and promote the value chain upgrading of trading partners in the regional production system, but also facilitates the construction of domestic value chains, thus forming a new pattern of bilateral value chain reshaping. The conclusions still hold after addressing the potential endogeneity and robustness concerns. Mechanism test results show that the effects of productivity enhancement and institutional quality improvement are important channels for RTAs-deepening to promote value chain reshaping. Heterogeneity test results indicate that ‘WTO-X’ provisions of RTAs are more conducive to promoting value chain reshaping, and the promoting effect of RTAs-deepening on value chain reshaping is more significant for the manufacturing industry. These findings have important policy implications to further expand high-level opening-up, deepen RTAs provisions and actively participate in global governance.