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Mapping the UK domestic and global value chains from a Brexit perspective

Author

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  • Escaith, Hubert

Abstract

The paper offers background information for a sectoral analysis of the Brexit implications on the UK value chains. It analyses trade data through the specific angle of inter-industrial relation-ships and international supply chains, including employment implications. The paper benchmarks UK against other key G-20 countries for three specific industries that have a particular relevance from an inter-industrial perspective: Transport equipment, Chemicals and Electronics. In the pro-cess, a number of stylised facts are identified and several synthetic indicators are produced. Be-cause a hard Brexit is expected to increase trade costs and affect prices, the paper estimates the impact of additional tariff and non-tariff trade costs on the competitiveness of these three sectors. Hopes that a devaluation of the Pound may compensate for higher trade costs must take into con-sideration that devaluation affects only the domestic share of the value-added, requiring larger exchange rate adjustment. In the case of Transport equipment, the required devaluation is around 30% if all tariff and non-tariff trade costs are passed to the producers.

Suggested Citation

  • Escaith, Hubert, 2018. "Mapping the UK domestic and global value chains from a Brexit perspective," MPRA Paper 87824, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87824
    as

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    File URL: https://mpra.ub.uni-muenchen.de/87824/1/MPRA_paper_87824.pdf
    File Function: original version
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    References listed on IDEAS

    as
    1. Minford, Patrick, 2016. "Understanding UK trade agreements with the EU and other countries," Cardiff Economics Working Papers E2016/1, Cardiff University, Cardiff Business School, Economics Section.
    2. Koen De Backer & Dorothee Flaig, 2017. "The future of global value chains: Business as usual or “a new normal”?," OECD Science, Technology and Industry Policy Papers 41, OECD Publishing.
    3. Mulabdic,Alen & Osnago,Alberto & Ruta,Michele, 2017. "Deep integration and UK-EU trade relations," Policy Research Working Paper Series 7947, The World Bank.
    4. Baldwin, Richard, 2011. "21st century regionalism: Filling the gap between 21st century trade and 20th century trade rules," WTO Staff Working Papers ERSD-2011-08, World Trade Organization (WTO), Economic Research and Statistics Division.
    5. Connell, William & Simons, Wouter & Vandenbussche, Hylke, 2017. "Global Value Chains, Trade Shocks And Jobs: An Application to Brexit," CEPR Discussion Papers 12303, C.E.P.R. Discussion Papers.
    6. Rita Cappariello, 2017. "Brexit: estimating tariff costs for EU countries in a new trade regime with the UK," Questioni di Economia e Finanza (Occasional Papers) 381, Bank of Italy, Economic Research and International Relations Area.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Global Value Chains; BREXIT; input-output analysis; network analysis; trade costs; competitiveness;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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