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Trade costs and borders in global value chains

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  • Kirill Muradov

    (Centre for Information and Analysis of Foreign Trade)

Abstract

The effects of trade cost magnification due to multiple border crossings along global value chains are known from the scholarly literature and the reports of international organizations. However, evidence supporting or challenging this view has been limited. This article proposes two new measures of cumulative resistance to exports in global value chains and a measure of the average number of border crossings that build on the inter-country input–output framework. Data from the World Input–Output Database are supplemented with estimates derived from the UN Comtrade and UN TRAINS, allowing for an experimental computation of the accumulated import tariffs faced by exporters in 2001, 2005 and 2010. The average number of border crossings exhibits a slow upward trend, but the accumulated tariffs decline quickly. Trade liberalization therefore neutralizes the risk of higher cumulative protection associated with the international fragmentation of production. The benefits of liberalization or facilitation of trade within free trade agreements accrue to non-members, and this effect can now be estimated.

Suggested Citation

  • Kirill Muradov, 2017. "Trade costs and borders in global value chains," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 487-509, August.
    • Handle: RePEc:spr:weltar:v:153:y:2017:i:3:d:10.1007_s10290-017-0280-6
    DOI: 10.1007/s10290-017-0280-6
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    Cited by:

    1. Mahdi Ghodsi & Robert Stehrer, 2022. "Trade policy and global value chains: tariffs versus non-tariff measures," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(3), pages 887-916, August.
    2. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    3. Ilaria Fusacchia & Alessandro Antimiani & Luca Salvatici, 2021. "An assessment of import tariff costs for Italian exporting firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(1), pages 31-56, April.
    4. Jie Wu & Chan‐Guk Huh & Jacob Wood, 2021. "Globally chained economies, unwitting victims of the US‐China trade war," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(2), pages 60-76, November.
    5. Flaig, Dorothee & Boysen-Urban, Kirsten, 2019. "EU Agricultural Domestic Support in Global Value Chains or Where Does the Money Go?," Conference papers 333054, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Jie Wu & Jacob Wood & Keunyeob Oh & Haejin Jang, 2021. "Evaluating the cumulative impact of the US–China trade war along global value chains," The World Economy, Wiley Blackwell, vol. 44(12), pages 3516-3533, December.
    7. Rita Cappariello & Milan Damjanovic & Michele Mancini & Filippo Vergara Caffarelli, 2018. "EU-UK global value chain trade and the indirect costs of Brexit," Questioni di Economia e Finanza (Occasional Papers) 468, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Global value chains; Trade costs; Cumulative tariffs; Border crossings; Input–output tables;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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