IDEAS home Printed from https://ideas.repec.org/a/taf/intecj/v30y2016i2p204-216.html
   My bibliography  Save this article

Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains

Author

Listed:
  • Kevin C. Cheng
  • Gee Hee Hong
  • Dulani Seneviratne
  • Rachel van Elkan

Abstract

Global value chains (GVCs) are a prominent feature of global production and trading systems. Using the OECD-WTO database on trade in value added, this paper examines the exchange rate elasticities of GVC-related exports and imports and compares them with elasticities for trade in traditonal goods. We find that a real depreciation raises both the foreign and domestic value-added content of GVC-related exports. The size of these elasticities is found to be smaller when the import content of GVC exports is larger. Among the key policy implications of these results is that exchange rate changes by small contributors of value added have little effect on their own production or the production of their supply chain partners. On the other hand, large contributors to the value-added of the final product create spillovers to their smaller supply chain partners, obviating traditional beggar-thy-neighbor concerns.

Suggested Citation

  • Kevin C. Cheng & Gee Hee Hong & Dulani Seneviratne & Rachel van Elkan, 2016. "Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains," International Economic Journal, Taylor & Francis Journals, vol. 30(2), pages 204-216, June.
    • Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:204-216
    DOI: 10.1080/10168737.2016.1148418
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10168737.2016.1148418
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10168737.2016.1148418?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ms. Elif C Arbatli Saxegaard & Mr. Gee Hee Hong, 2016. "Singapore’s Export Elasticities: A Disaggregated Look into the Role of Global Value Chains and Economic Complexity," IMF Working Papers 2016/052, International Monetary Fund.
    2. David C. López-Valenzuela & Enrique Montes-Uribe & Héctor M. Zárate-Solano & Alvaro Carmona-Duarte, 2019. "Determinantes y evolución entre precios y cantidades de las exportaciones industriales de Colombia: un estudio a partir de un modelo de Panel-VAR," Borradores de Economia 1075, Banco de la Republica de Colombia.
    3. Fišera, Boris & Horváth, Roman, 2022. "Are exchange rates less important for trade in a more globalized world? Evidence for the new EU members," Economic Systems, Elsevier, vol. 46(1).
    4. Mr. Tamim Bayoumi & Maximiliano Appendino & Jelle Barkema & Mr. Diego A. Cerdeiro, 2018. "Measuring Competitiveness in a World of Global Value Chains," IMF Working Papers 2018/229, International Monetary Fund.
    5. Khee Giap Tan & Luu Nguyen Trieu Duong & Hui Yin Chuah, 2019. "Impact of exchange rates on ASEAN's trade in the era of global value chains: An empirical assessment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(7), pages 873-901, October.
    6. Mr. Daniel Leigh & Weicheng Lian & Mr. Marcos Poplawski Ribeiro & Rachel Szymanski & Viktor Tsyrennikov & Hong Yang, 2017. "Exchange Rates and Trade: A Disconnect?," IMF Working Papers 2017/058, International Monetary Fund.
    7. Bhushan Praveen Jangam & Hari Venkatesh, 2022. "Global Value Chains and Exchange Rate Disconnect," Economic Papers, The Economic Society of Australia, vol. 41(4), pages 347-359, December.
    8. Mr. Tamim Bayoumi & Jelle Barkema & Mr. Diego A. Cerdeiro, 2019. "The Inflexible Structure of Global Supply Chains," IMF Working Papers 2019/193, International Monetary Fund.
    9. Prilepskiy, Ilya (Прилепский, Илья), 2017. "Factors of Exports Dynamics and Import Substitution after the Sharp Exchange Rate Depreciation [Факторы Динамики Экспорта И Импортозамещения После Резкого Ослабления Курса Национальной Валюты]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 100-133, June.
    10. Adler, Gustavo & Meleshchuk, Sergii & Buitron, Carolina Osorio, 2023. "Global value chains and external adjustment: Do exchange rates still matter?," Economic Modelling, Elsevier, vol. 118(C).
    11. Zhiheng Wu & Guisheng Hou & Baogui Xin, 2020. "Has the Belt and Road Initiative Brought New Opportunities to Countries Along the Routes to Participate in Global Value Chains?," SAGE Open, , vol. 10(1), pages 21582440209, January.
    12. Ryan M. Weldzius, 2021. "The end of currency manipulation? Global production networks and exchange rate outcomes," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 514-532, November.
    13. SATO Kiyotaka & Shajuan ZHANG, 2019. "Do Exchange Rates Matter in Global Value Chains?," Discussion papers 19059, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:204-216. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RIEJ20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.