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How Does the Regional Comprehensive Economic Partnership Affect the Restructuring of Global Value Chains?

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  • Zijie Fan
  • Siyi Peng
  • Wenjie Hu

Abstract

This paper quantifies the way in which the Regional Comprehensive Economic Partnership (RCEP) affects the restructuring of global value chains (GVCs). It incorporates an input– output structure into a general equilibrium model, highlighting important differences between intermediates and final goods. Using tariff reduction schedules for the RCEP agreement and Asian Development Bank Multi‐Region Input–Output database, it evaluates the impact of the RCEP's tariff cuts on vertical specialization and the GVC position index of members. It shows that the RCEP significantly increased vertical specialization and the weighted average number of stages for members for primary factors of production and final consumption, which led to more complex and longer production chains. This was mainly due to the trade creation in intermediates imported from member countries and those outside it. This is an important finding, distinct from traditional trade models without an input–output structure.

Suggested Citation

  • Zijie Fan & Siyi Peng & Wenjie Hu, 2023. "How Does the Regional Comprehensive Economic Partnership Affect the Restructuring of Global Value Chains?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(3), pages 140-172, May.
    • Handle: RePEc:bla:chinae:v:31:y:2023:i:3:p:140-172
    DOI: 10.1111/cwe.12488
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