An Empirical Investigation of Trade Diversion and Global Value Chains

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 identi...

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Main Authors:	de Soyres, Francois, Maire, Julien, Sublet, Guillaume
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	TRADE AGREEMENTS TRADE DIVERSION TRADE POLICY GLOBAL VALUE CHAIN REGIONAL TRADE AGREEMENTS RULES OF ORIGIN INTERMEDIARY IMPORTS
Online Access:	http://documents.worldbank.org/curated/en/480621576683574272/An-Empirical-Investigation-of-Trade-Diversion-and-Global-Value-Chains http://hdl.handle.net/10986/33058

id	okr-10986-33058
recordtype	oai_dc
spelling	okr-10986-330582022-09-20T00:13:22Z An Empirical Investigation of Trade Diversion and Global Value Chains de Soyres, Francois Maire, Julien Sublet, Guillaume TRADE AGREEMENTS TRADE DIVERSION TRADE POLICY GLOBAL VALUE CHAIN REGIONAL TRADE AGREEMENTS RULES OF ORIGIN INTERMEDIARY IMPORTS 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. 2019-12-19T17:32:27Z 2019-12-19T17:32:27Z 2019-12 Working Paper http://documents.worldbank.org/curated/en/480621576683574272/An-Empirical-Investigation-of-Trade-Diversion-and-Global-Value-Chains http://hdl.handle.net/10986/33058 English Policy Research Working Paper;No. 9089 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	TRADE AGREEMENTS TRADE DIVERSION TRADE POLICY GLOBAL VALUE CHAIN REGIONAL TRADE AGREEMENTS RULES OF ORIGIN INTERMEDIARY IMPORTS
spellingShingle	TRADE AGREEMENTS TRADE DIVERSION TRADE POLICY GLOBAL VALUE CHAIN REGIONAL TRADE AGREEMENTS RULES OF ORIGIN INTERMEDIARY IMPORTS de Soyres, Francois Maire, Julien Sublet, Guillaume An Empirical Investigation of Trade Diversion and Global Value Chains
relation	Policy Research Working Paper;No. 9089
description	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.
format	Working Paper
author	de Soyres, Francois Maire, Julien Sublet, Guillaume
author_facet	de Soyres, Francois Maire, Julien Sublet, Guillaume
author_sort	de Soyres, Francois
title	An Empirical Investigation of Trade Diversion and Global Value Chains
title_short	An Empirical Investigation of Trade Diversion and Global Value Chains
title_full	An Empirical Investigation of Trade Diversion and Global Value Chains
title_fullStr	An Empirical Investigation of Trade Diversion and Global Value Chains
title_full_unstemmed	An Empirical Investigation of Trade Diversion and Global Value Chains
title_sort	empirical investigation of trade diversion and global value chains
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/480621576683574272/An-Empirical-Investigation-of-Trade-Diversion-and-Global-Value-Chains http://hdl.handle.net/10986/33058
_version_	1764477905046339584

An Empirical Investigation of Trade Diversion and Global Value Chains

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