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Export incentives and global value chains

Svetlana Ledyayeva

No 2017-2, UCL SSEES Economics and Business working paper series from UCL School of Slavonic and East European Studies (SSEES)

Abstract: Nowadays global value chains (GVCs) play a central role in trade flows. This paper argues that GVCs can play an important role in transmission of national trade policy effects across borders. More specifically, this study examines how domestic export incentives can affect foreign countries' exporters in the presence of GVCs. Existing theoretical literature suggests that in addition to negative "competition for market share" effects, there can be positive effects, which propagate via backward and forward GVCs linkages. To the best of our knowledge, this paper is the first one that empirically tests these effects. In particular, using recent trade data for BRICs countries (Brazil, Russia, India and China) this study shows that in the GVCs world there can be both negative and positive effects of domestic export incentives for foreign exporters as theory predicts. According to our framework, positive effects propagate via GVCs linkages.

Keywords: export; export policy; export subsidy; export incentive; global value chains; forward linkages; backward linkages; BRICs; Brazil; Russia; China; India (search for similar items in EconPapers)
JEL-codes: F13 F14 O10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis and nep-int
Date: 2017-04
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