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Regulatory heterogeneity and global value chain-related trade

Alessio Lombini

No 21-08, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: In this paper, I estimate the impact of heterogeneity in non-tariff measures policies on countries’ global value chain-related trade and its backward and forward components. I first build a regulatory distance index, which measures the degree of dissimilarity in non-tariff measure structures between two trade partners. By including the regulatory distance index in a structural gravity model, I then find a significant negative effect of regulatory distance on total, backward, and forward global value chain-related trade. The negative impact is even more substantial when I restrict the analysis to manufacturing sectors. On the country dimension, I demonstrate that the effects of regulatory distance are associated with the exporters’ and the importers’ income levels.

Keywords: Gravity equation; gravity model; non-tariff measures; regulatory distance; trade protection; international trade; global value chains; technical regulations. (search for similar items in EconPapers)
JEL-codes: E16 F13 F14 F15 F63 L51 O40 (search for similar items in EconPapers)
Pages: 52 pages.
Date: 2021-09
New Economics Papers: this item is included in nep-int and nep-isf
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