An Empirical Investigation of Trade Diversion and Global Value Chains

François de Soyres, Julien Luc Yvon Maire and Guillaume Sublet

No 9089, Policy Research Working Paper Series from The World Bank

Abstract: This paper uses data on directional trade flows and Regional Trade Agreements (RTA) to i) estimate the effects of RTA on trade flows and ii) assess the importance of Global Value Chains for these effects. Based on a Difference-in- Difference identification strategy, we find that RTAs are associated with: (1) an increase in trade within the region, (2) a decrease in inflows to the region, and (3) an increase in outflows from the region. The first two findings can be understood as trade creation and trade diversion due to a shift in demand associated with the lower trade barriers within the region and Rules of Origin as an implicit trade barrier for imports from the rest of the world. Global Value Chains are most relevant to understand the third finding on the increase in outflows from the region. The key determinant of the increase in outflows is the importance of the Regional Value Chains for imports of intermediates by members of the region.

Date: 2019-12-18
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://documents.worldbank.org/curated/en/48062157 ... bal-Value-Chains.pdf (application/pdf)

Related works:
Working Paper: An Empirical Investigation of Trade Diversion and Global Value Chains (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9089

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().