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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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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Laura Alfaro & Pol Antras & Davin Chor & Paola Conconi, 2015. "Internalizing Global Value Chains: A Firm-Level Analysis," Working Papers ECARES ECARES 2015-29, ULB -- Universite Libre de Bruxelles.
    2. 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.
    3. Lorenzo Caliendo & Aleh Tsyvinski & Fernando Parro, 2018. "Distortions and the Structure of the World Economy," 2018 Meeting Papers 168, Society for Economic Dynamics.
    4. Thibault Fally & James Sayre, 2018. "Commodity Trade Matters," 2018 Meeting Papers 172, Society for Economic Dynamics.
    5. Fabian Eckert & Costas Arkolakis, 2017. "Combinatorial Discrete Choice," 2017 Meeting Papers 249, Society for Economic Dynamics.
    6. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," NBER Working Papers 24380, National Bureau of Economic Research, Inc.
    7. Fally,Thibault & Hillberry,Russell Henry, 2015. "A Coasian model of international production chains," Policy Research Working Paper Series 7434, The World Bank.
    8. 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.
    9. Shang-Jin Wei & Yinxi Xie, 2018. "On the Divergence between CPI and PPI as Inflation Gauges: The Role of Supply Chains," NBER Working Papers 24319, National Bureau of Economic Research, Inc.
    10. Nelson Lind & Natalia Ramondo, 2018. "Trade with Correlation," 2018 Meeting Papers 627, Society for Economic Dynamics.
    11. 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.
    12. 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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