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Cumulative Tariff Cost Rate and Structure in the Global Value Chain: A Theoretical and Empirical Study

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  • Ni Hongfu

    (School of Economics, University of Chinese Academy of Social Sciences; Institute of Economics, Chinese Academy of Social Sciences. Beijing China)

Abstract

This paper constructs a more unified measurement framework from the perspective of the Leontief inverse matrix and Ghosh inverse matrix (Ghosh). At the same time, referring to the four-term decomposition method of Leontief inverse matrix in Muradov (2016), this paper analyzes the structural decomposition of the cumulative tariff cost rate. Results show that (1) Overall, from 2000 to 2017, China’s cumulative tariff cost rate, direct tariff cost rate, and multi-stage tariff cost rate all showed a downward trend, and the decline was greater than that of other countries (regions). China has strictly fulfilled its WTO accession commitments and has greatly reduced the tariff rate on imported intermediate goods. (2) With China’s deep participation in the global value chain, the amplification effect of China’s tariffs has increased from 2.57 in 2000 to 3.17 in 2017, and there is a certain degree of “amplification effect” (above 1.5) in tariffs in all countries in the world. (3) From the perspective of the contribution rate of various countries in the world, China contributes the most to the global cumulative tariff cost rate, which is due to the complexity of the global production network structure, rather than the excessively high tariff rate imposed by China on imported intermediate goods. In terms of policy implications, if China did not take the initiative to reduce tariffs, the structural changes in the global production network would lead to a larger global cumulative tariff cost rate.

Suggested Citation

  • Ni Hongfu, 2024. "Cumulative Tariff Cost Rate and Structure in the Global Value Chain: A Theoretical and Empirical Study," China Finance and Economic Review, De Gruyter, vol. 13(3), pages 3-23.
  • Handle: RePEc:bpj:cferev:v:13:y:2024:i:3:p:3-23:n:1001
    DOI: 10.1515/cfer-2024-0013
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    References listed on IDEAS

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