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Specialization within global value chains: The role of additive transport costs

Rainer Lanz and Roberta Piermartini

No ERSD-2018-05, WTO Staff Working Papers from World Trade Organization (WTO), Economic Research and Statistics Division

Abstract: This paper studies the factors of comparative advantage within global value chains relying on a framework where comparative advantage is measured through the interaction of country and industry characteristics. We find that good institutions give a comparative advantage in the later stages of the production process, whereas good transport infrastructure gives an advantage in the early stages of production. We explain these results with a simple theoretical framework that shows how predicted patterns of specializations depend on whether trade costs are additive or multiplicative.

Keywords: global value chains; quality of transport infrastructure; quality of institutions; comparative advantage; upstreamness; production networks; trade costs (search for similar items in EconPapers)
JEL-codes: F13 F14 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-knm and nep-tre
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
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