Working Paper: NBER ID: w24185
Authors: Pol Antràs; Davin Chor
Abstract: This paper offers four contributions to the empirical literature on global value chains (GVCs). First, we provide a succinct overview of several measures developed to capture the upstreamness or downstreamness of industries and countries in GVCs. Second, we employ data from the World Input-Output Database (WIOD) to document the empirical evolution of these measures over the period 1995-2011; in doing so, we highlight salient patterns related to countries’ GVC positioning – as well as some puzzling correlations – that emerge from the data. Third, we develop a theoretical framework – which builds on Caliendo and Parro’s (2015) variant of the Eaton and Kortum (2002) model – that provides a structural interpretation of all the entries of the WIOD in a given year. Fourth, we resort to a calibrated version of the model to perform counterfactual exercises that: (i) sharpen our understanding of the independent effect of several factors in explaining the observed empirical patterns in the period 1995-2011; and (ii) provide guidance for how future changes in the world economy are likely to shape the positioning of countries in GVCs.
Keywords: Global Value Chains; Upstreamness; Downstreamness; Trade Costs
JEL Codes: D5; F1; F2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade costs (F19) | GVC positioning (F12) |
| production-staging distance from final demand (u) (R32) | production-staging distance from primary factors (d) (R30) |
| growing importance of service sectors (O14) | upstreamness and downstreamness (R12) |
| future reductions in trade costs (F12) | GVC positioning (F12) |