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The Effect of Non-Tariff Measures on Global Value Chain Participation

Upalat Korwatanasakul () and Youngmin Baek
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Youngmin Baek: Institute of Asia–Pacific Studies, Waseda University, Japan

No DP-2021-15, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: This study examines the impact of non-tariff measures (NTMs) on global value chain (GVC) participation and the underlying mechanisms. Our study employs a novel approach using an additional compliance requirement indicator as a relative proxy for NTMs to measure their impact on GVC participation. We conduct a cross-sectional analysis at the industry level, spanning 19 industrial sectors in 30 countries in 2015. We combine our additional compliance requirement indicator dataset calculated from NTM data in the Trade Analysis Information System, with our dataset on trade in value added estimated from the Organisation for Economic Co-operation and Development Inter-Country Input–Output Table. Our analysis finds that, while NTMs and tariffs both negatively impact backward GVC participation, the impact of NTMs is greater than that of tariff measures. Moreover, the estimated results show that inward foreign direct investment is positively associated with backward GVC participation. Therefore, policies that reduce trade costs from policy barriers, especially NTMs, and attract more foreign direct investment can help promote GVC participation.

Keywords: additional compliance requirement indicator; backward GVC participation; global value chain; input imports; non-tariff measures; regulatory distance indicator (search for similar items in EconPapers)
JEL-codes: F13 F14 F63 (search for similar items in EconPapers)
Date: 2021-06-21
New Economics Papers: this item is included in nep-int
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