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Vertical Spillovers in Global Value Chains

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  • Swapnika Rachapalli

Abstract

This paper uses input-output relationships across highly disaggregated products to establish two empirical regularities with bilateral trade data. First, countries are likely to have revealed comparative advantage (RCA) in a product if they also have RCA in products that are upstream or downstream to that product. Second, the RCA of a product improves over time if the country experiences export demand shocks to its inputs or outputs. This suggests that being integrated as suppliers into the global production network can benefit countries by improving their capabilities across different stages of production.

Suggested Citation

  • Swapnika Rachapalli, 2024. "Vertical Spillovers in Global Value Chains," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 124-129, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:124-29
    DOI: 10.1257/pandp.20241020
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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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