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On the Geography of Global Value Chains

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  • Pol Antràs
  • Alonso de Gortari

Abstract

This paper develops a multi-stage general-equilibrium model of global value chains (GVCs) and studies the specialization of countries within GVCs in a world with barriers to international trade. With costly trade, the optimal location of production of a given stage in a GVC is not only a function of the marginal cost at which that stage can be produced in a given country, but is also shaped by the proximity of that location to the precedent and the subsequent desired locations of production. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central locations. We also develop and estimate a tractable, quantifiable version of our model that illustrates how changes in trade costs affect the extent to which various countries participate in domestic, regional or global value chains, and traces the real income consequences of these changes.

Suggested Citation

  • Pol Antràs & Alonso de Gortari, 2017. "On the Geography of Global Value Chains," NBER Working Papers 23456, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23456
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    Cited by:

    1. Magne Mogstad & Emmanuel Dhyne & Ayumu Kikkawa & Felix Tintelnot, 2017. "Trade and Domestic Production Networks," 2017 Meeting Papers 381, Society for Economic Dynamics.
    2. repec:eee:inecon:v:114:y:2018:i:c:p:299-315 is not listed on IDEAS
    3. Laura Alfaro & Pol Antràs & Davin Chor & Paola Conconi, 2019. "Internalizing Global Value Chains: A Firm-Level Analysis," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 508-559.
    4. Pérez, Carlos Andrés & Solano, Stephany & Londoño, Harold, 2018. "Compás Empresarial y de Competitividad No. 2 Somos lo que hacemos El valor agregado de las exportaciones de Colombia y el Valle del Cauca 2016
      [Business and Competitiveness Compass No. 2 We are wha
      ," MPRA Paper 90080, University Library of Munich, Germany.
    5. 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.
    6. Lee, Eunhee & Yi, Kei-Mu, 2018. "Global value chains and inequality with endogenous labor supply," Journal of International Economics, Elsevier, vol. 115(C), pages 223-241.
    7. Peter B. Dixon & Maureen Rimmer, 2019. "Integrating a Global Supply Chain Model With a Computable General Equilibrium Model," Centre of Policy Studies/IMPACT Centre Working Papers g-292, Victoria University, Centre of Policy Studies/IMPACT Centre.
    8. Lorenzo Caliendo & Fernando Parro & Aleh Tsyvinski, 2017. "Distortions and the Structure of the World Economy," NBER Working Papers 23332, National Bureau of Economic Research, Inc.
    9. Thibault Fally & James Sayre, 2018. "Commodity Trade Matters," 2018 Meeting Papers 172, Society for Economic Dynamics.
    10. Fabian Eckert & Costas Arkolakis, 2017. "Combinatorial Discrete Choice," 2017 Meeting Papers 249, Society for Economic Dynamics.
    11. Federico Esposito, 2017. "Entrepreneurial Risk and Diversification through Trade," Working Papers w201714, Banco de Portugal, Economics and Research Department.
    12. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," NBER Working Papers 24380, National Bureau of Economic Research, Inc.
    13. Fally, Thibault & Hillberry, Russell, 2018. "A Coasian model of international production chains," Journal of International Economics, Elsevier, vol. 114(C), pages 299-315.
    14. Loredana Fattorini & Armando Rungi & Zhen Zhu, 2017. "The Organization of Global Supply Networks," Working Papers 08/2017, IMT Institute for Advanced Studies Lucca, revised Nov 2017.
    15. Johannes Boehm & Ezra Oberfield, 2018. "Misallocation in the Market for Inputs: Enforcement and the Organization of Production," Sciences Po publications 2018-04, Sciences Po.
    16. Shang-Jin Wei & Yinxi Xie, 2018. "The Wedge of the Century: Understanding a Divergence between CPI and PPI Inflation Measures," NBER Working Papers 24319, National Bureau of Economic Research, Inc.
    17. Bosker, Maarten & Westbrock, Bastian, 2018. "The network origins of the gains from trade," CEPR Discussion Papers 13285, C.E.P.R. Discussion Papers.
    18. Emanuel Ornelas & John L. Turner & Grant Bickwit, 2018. "Preferential Trade Agreements and Global Sourcing," CESifo Working Paper Series 7327, CESifo Group Munich.
    19. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," 2018 Meeting Papers 627, Society for Economic Dynamics.
    20. Charlie Joyez, 2019. "Alignment of Multinational Firms along Global Value Chains: A Network-based Perspective," GREDEG Working Papers 2019-05, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    21. Emmanuel Dhyne & Glenn Magerman & Ayumu Ken kikkawa, 2019. "Imperfect Competition in Firm-to-Firm Trade," Working Papers ECARES 2019-05, ULB -- Universite Libre de Bruxelles.
    22. repec:oup:jecgeo:v:19:y:2019:i:1:p:1-30. is not listed on IDEAS
    23. Antr�s, Pol & Chor, Davin, 2017. "On the Measurement of Upstreamness and Downstreamness in Global Value Chains," CEPR Discussion Papers 12549, C.E.P.R. Discussion Papers.
    24. Dominik Boddin, 2016. "The Role of Newly Industrialized Economies in Global Value Chains," IMF Working Papers 16/207, International Monetary Fund.

    More about this item

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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