Global Supply Chains and Trade Policy

Global Supply Chains and Trade Policy

How do global supply chain linkages modify countries' incentives to impose import protection? Are these linkages empirically important determinants of trade policy? To address these questions, this paper introduces supply chain linkages into a...

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Bibliographic Details
Main Authors:	Blanchard, Emily J., Bown, Chad P., Johnson, Robert C.
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	TARIFFS EXPORT SUPPLY URUGUAY ROUND MULTILATERAL TRADE WORLD TRADE ORGANIZATION PRODUCTION TRADE NEGOTIATIONS REGIONAL TRADE AGREEMENTS FOREIGN INVESTORS TRADE POLICY INSTRUMENTS INCOME GRAVITY VARIABLES PREFERENTIAL AGREEMENT FOREIGN PRODUCERS TRADE BARRIERS EXPORTS ELASTICITY TRADE FLOWS EXPORTERS POLITICAL ECONOMY WELFARE INCENTIVES ECONOMIC POLICY EQUILIBRIUM FREE TRADE AGREEMENTS VARIABLES FACTORS OF PRODUCTION PREFERENTIAL MARKET ACCESS INPUTS DUMPING RETURNS TO SCALE PAYMENTS MARKET ACCESS FREE TRADE EXPORT SUBSIDIES TRENDS PREFERENTIAL ACCESS TRADE AGREEMENTS FINAL GOODS TRADE PATTERNS GROSS EXPORTS PREFERENTIAL TRADE AGREEMENTS FOREIGN PRODUCTION ABSOLUTE VALUE CONSUMER SURPLUS DEVELOPMENT ECONOMICS FOREIGN SUPPLIERS DOMESTIC PRODUCERS PRIMARY FACTORS RENT REGIONAL TRADE ANTIDUMPING CONSTANT RETURNS TO SCALE BASE YEAR ECONOMETRICS EXTERNALITIES IMPORT PROTECTION WTO BILATERAL AGREEMENTS WORLD PRICES ACCESS ECONOMIC POLICIES TRADE POLICY QUANTITATIVE RESTRICTIONS IMPORT PENETRATION EXPORT TAXES UTILITY TRADE AGREEMENT END USE INTERNATIONAL TRADE POLICY TRADE MOTIVES TAXES TRADE EXTERNALITIES APPLIED TARIFF EXTERNALITY CONSUMPTION HUMAN CAPITAL VALUE ADDED TRADE PREFERENCES REGIONALISM INTERNATIONAL TRADE TRADE COSTS WORKER RIGHTS VALUE FOREIGN DIRECT INVESTMENT FORMAL ANALYSIS CONCESSIONS FOREIGN INVESTMENT TRADE PROTECTION NATIONAL INCOME UTILITY FUNCTION EXPORT SHARES SAFEGUARD MEASURES ECONOMY AGRICULTURE CONSUMERS INPUT-OUTPUT TABLES FREE TRADE AREAS MEASUREMENT GROSS OUTPUT BENCHMARK ECONOMIC THEORY TRADE LIBERALIZATION MULTILATERAL TRADE LIBERALIZATION ENDOGENOUS VARIABLES TERMS OF TRADE PREFERENTIAL TREATMENT RECIPROCITY TRADE DIVERSION CAPITAL GOODS TRADE DATA TRADE BILATERAL IMPORTS GDP TRADE PARTNERS GOODS THEORY IMPORT BARRIERS GENERALIZED SYSTEM OF PREFERENCES BILATERAL TRADE DOMESTIC PRODUCTION CUSTOMS UNIONS APPAREL INDUSTRY INPUT TRADE PREFERENTIAL TRADE TARIFF SUPPLY REVENUE NASH EQUILIBRIUM IMPORT QUANTITIES WORLD TRADE BILATERAL TRADE DATA ARBITRAGE INTERMEDIATE INPUTS APPAREL OUTCOMES DOMESTIC SUPPLIERS DOMESTIC INDUSTRY PRICES FOREIGN GOODS DEVELOPMENT POLICY
Online Access:	http://documents.worldbank.org/curated/en/2016/01/25801220/global-supply-chains-trade-policy http://hdl.handle.net/10986/23702

Description
Summary:	How do global supply chain linkages modify countries' incentives to impose import protection? Are these linkages empirically important determinants of trade policy? To address these questions, this paper introduces supply chain linkages into a workhorse terms-of-trade model of trade policy with political economy. Theory predicts that discretionary final goods tariffs will be decreasing in the domestic content of foreign-produced final goods. Provided foreign political interests are not too strong, final goods tariffs will also be decreasing in the foreign content of domestically-produced final goods. The paper tests these predictions using newly assembled data on bilateral applied tariffs, temporary trade barriers, and value-added contents for 14 major economies over the 1995-2009 period. There is strong support for the empirical predictions of the model. The results imply that global supply chains matter for trade policy, both in principle and in practice.

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