Fragmentation and Gains from Trade

Edwin Lai () and Han (Steffan) Qi

No HIAS-E-76, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: In this paper, we estimate the competitiveness of countries in intermediate goods and in final goods. We find that China’s competitiveness in both intermediate goods and final goods increased exceptionally rapidly during 1995-2011. We also find that the gains from trade of countries with strong comparative advantage in final goods can be substantially under-estimated if we do not separately take into account trade flows in intermediate goods and final goods. We also find that, during 1995-2011, the average increase in gains from intermediate goods trade across all countries in our sample is distinctly higher than the average increase in gains from final goods trade. This suggests that gains from trade due to international fragmentation of production is becoming more important over time relative to gains from trade in final goods.

Keywords: fragmentation; gains in trade; global value chain; global sourcing (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 F17 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-10
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-76

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