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GVCs and the endogenous geography of RTAs

Author

Listed:
  • Lionel Fontagné

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Gianluca Santoni

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

Abstract

Geographical and economic characteristics help to predict Regional Trade Agreements (RTAs), and we here argue that Global Value Chains (GVCs) are one of these predictors. We estimate the time-varying probability that a country pair share a trade agreement, identify pairs who should sign an RTA and have not yet done so, and among these potential RTAs those mostly driven by the participation of the country pairs in GVCs. Using a General-Equilibrium model of an endowment economy, we construct counterfactuals where the geography of RTAs is redesigned according to our predictions and assess the trade and welfare consequences of phasing-in such pending RTAs. We last simulate the impact of a slowdown of GVCs on trade and welfare.

Suggested Citation

  • Lionel Fontagné & Gianluca Santoni, 2021. "GVCs and the endogenous geography of RTAs," PSE-Ecole d'économie de Paris (Postprint) halshs-03956355, HAL.
    • Handle: RePEc:hal:pseptp:halshs-03956355
    DOI: 10.1016/j.euroecorev.2021.103656
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    Cited by:

    1. Bernard Hoekman, 2020. "Global Value Chains: Inter-Industry Linkages, Trade Costs and Policies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(2), pages 189-193, September.
    2. Kim, Dongin & Steinbach, Sandro & Zurita, Carlos, 2024. "Deep trade agreements and agri-food global value chain integration," Food Policy, Elsevier, vol. 127(C).
    3. Essotanam Mamba & Afi Balaki, 2023. "Deep regional trade agreement as a driver for global value chains in Africa: the case of ECOWAS region," Economic Change and Restructuring, Springer, vol. 56(3), pages 2037-2068, June.
    4. Gaulier, Guillaume & Sztulman, Aude & Ünal, Deniz, 2020. "Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components," International Economics, Elsevier, vol. 161(C), pages 219-236.
    5. De Soyres,Francois Michel Marie Raphael & Maire,Julien Luc Yvon & Sublet,Guillaume, 2019. "An Empirical Investigation of Trade Diversion and Global Value Chains," Policy Research Working Paper Series 9089, The World Bank.
    6. Ross Jestrab, 2021. "The effects of domestic labour mobility on trade agreements: Empirical evidence," The World Economy, Wiley Blackwell, vol. 44(8), pages 2238-2283, August.
    7. Kiran Ayub & Peri Silva, 2024. "Product differentiation, interdependence, and the formation of PTAs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 905-952, August.
    8. Eduardo Rodrigues Sanguinet & Augusto Mussi Alvim & Miguel Atienza, 2022. "Trade agreements and participation in global value chains: Empirical evidence from Latin America," The World Economy, Wiley Blackwell, vol. 45(3), pages 702-738, March.

    More about this item

    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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