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Where Does Value-Added Flow in Gross Exports, Mr. Newton? Global Supply Chains and New Regionalization's Effects in the Asia-Pacific

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  • Steinhauser, Dušan

    (University of Economics in Bratislava)

Abstract

The New Trade Theory proposes that participating in global supply chains (GVCs) enhances productivity and economies of scale. However, recent events like the COVID-19 pandemic and Ukraine crisis have exposed the vulnerabilities of GVCs to global risks. This study investigates the relationship between gross exports and the domestic value-added content of such exports, considering various factors, including labor productivity, especially in Belt and Road Initiative countries (A-P Belt and Road Initiative [BRI]). We analyze the role of GVCs using cross-sectional and panel data from the 2021 OECD Trade in Value-Added. Over the period from 2009 to 2018, we observed that countries with increasing productivity exported goods, services, and value-added to other countries experiencing similar productivity. Our findings indicate that export concentration contributes to increased value-added exports. However, we could not validate the effects of R&D spending, the real effective exchange rate, foreign direct investment inflows, and A-P BRI membership contributions using the difference-in-differences method.

Suggested Citation

  • Steinhauser, Dušan, 2023. "Where Does Value-Added Flow in Gross Exports, Mr. Newton? Global Supply Chains and New Regionalization's Effects in the Asia-Pacific," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 38(3), pages 335-359.
    • Handle: RePEc:ris:integr:0878
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    Keywords

    Global Supply Chains; GVCs; Gravity modeling; Poisson Pseudo-Maximum Likelihood; Trade in Value-Added; Belt and Road Initiative;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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