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Disentangling Global Value Chains

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  • Alonso de Gortari

Abstract

The patterns of production underlying the recent rise of global value chains (GVCs) have become increasingly complex. NAFTA supply chains, for example, are now deeply integrated: Using Mexican customs data, I find that exports to the U.S. use a much higher share of American inputs than exports to other countries. However, the conventional framework used to measure GVCs ignores this heterogeneity since it assumes that all output uses the same input mix. I develop a new framework that combines input-output data with additional information on supply chain linkages in order to construct GVCs reflecting the use of inputs observed in the latter. Improving measurement matters quantitatively since it affects both value-added trade measures and counterfactual experiments: I show that incorporating Mexican customs data raises the estimated share of U.S. value in U.S. imported Mexican manufactures from 18% to 30% and amplifies the welfare cost of a NAFTA trade war.

Suggested Citation

  • Alonso de Gortari, 2019. "Disentangling Global Value Chains," NBER Working Papers 25868, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25868
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    Cited by:

    1. Keith Head & Thierry Mayer, 2019. "Brands in Motion: How Frictions Shape Multinational Production," American Economic Review, American Economic Association, vol. 109(9), pages 3073-3124, September.
    2. Byahut, Rajkumar & Dutta, Sourish & Iyer, Chidambaran G. & Nataraj, Manikantha, 2020. "Commentary on World Development Report 2020: Trading for Development in the Age of Global Value Chains," EconStor Preprints 231380, ZBW - Leibniz Information Centre for Economics.
    3. Emmanuel Dhyne & Ayumu Ken Kikkawa & Magne Mogstad & Felix Tintelnot, 2021. "Trade and Domestic Production Networks," Review of Economic Studies, Oxford University Press, vol. 88(2), pages 643-668.
    4. Stefan Pahl & Marcel P. Timmer, 2020. "Do Global Value Chains Enhance Economic Upgrading? A Long View," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1683-1705, July.
    5. Pol Antràs & Alonso de Gortari, 2020. "On the Geography of Global Value Chains," Econometrica, Econometric Society, vol. 88(4), pages 1553-1598, July.
    6. Carlo Altomonte & Laura Bonacorsi & Italo Colantobe, 2018. "Trade and Growth in the Age of Global Value Chains," BAFFI CAREFIN Working Papers 1897, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    7. Armando Rungi & Loredana Fattorini & Kenan Huremovic, 2020. "Measuring the Input Rank in Global Supply Networks," Papers 2001.08003, arXiv.org, revised Sep 2020.
    8. Robert C. Johnson & Andreas Moxnes, 2019. "GVCs and Trade Elasticities with Multistage Production," NBER Working Papers 26018, National Bureau of Economic Research, Inc.
    9. 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.
    10. Ariell Reshef & Gianluca Santoni, 2019. "Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains," Working Papers 2019-16, CEPII research center.
    11. Sanguinet, Eduardo & Alvim, Augusto, 2020. "Effects of EU-Mercosur trade agreement on bilateral trade: the role of Brexit," MPRA Paper 103010, University Library of Munich, Germany.
    12. Michael Sposi & Kei-Mu Yi & Jing Zhang, 2021. "Trade Integration, Global Value Chains, and Capital Accumulation," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(3), pages 505-539, September.
    13. Alessandro Antimiani & Luca Salvatici & Ilaria Fusacchia, 2018. "GTAP-VA: An Integrated Tool for Global Value Chain Analysis," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(2), pages 69-105, December.
    14. Raphael A. Auer & Barthélémy Bonadio & Andrei A. Levchenko, 2020. "The Economics and Politics of Revoking NAFTA," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(1), pages 230-267, March.
    15. Diego A. Cerdeiro & Jelle Barkema & Mr. Tamim Bayoumi, 2019. "The Inflexible Structure of Global Supply Chains," IMF Working Papers 2019/193, International Monetary Fund.
    16. Sébastien Miroudot & Ming Ye, 2020. "Multinational production in value-added terms," Economic Systems Research, Taylor & Francis Journals, vol. 32(3), pages 395-412, July.
    17. Marcel P Timmer & Sébastien Miroudot & Gaaitzen J de Vries, 2019. "Functional specialisation in trade," Journal of Economic Geography, Oxford University Press, vol. 19(1), pages 1-30.
    18. Wang, Zi, 2021. "Headquarters gravity: How multinationals shape international trade," Journal of International Economics, Elsevier, vol. 131(C).

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    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • F1 - International Economics - - Trade
    • F6 - International Economics - - Economic Impacts of Globalization

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