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Regulatory heterogeneity and global value chain-related trade

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  • Alessio Lombini

Abstract

In this paper, I estimate the impact of heterogeneity in non-tariff measures policies on countries’ global value chain-related trade and its backward and forward components. I first build a regulatory distance index, which measures the degree of dissimilarity in non-tariff measure structures between two trade partners. By including the regulatory distance index in a structural gravity model, I then find a significant negative effect of regulatory distance on total, backward, and forward global value chain-related trade. The negative impact is even more substantial when I restrict the analysis to manufacturing sectors. On the country dimension, I demonstrate that the effects of regulatory distance are associated with the exporters’ and the importers’ income levels.

Suggested Citation

  • Alessio Lombini, 2021. "Regulatory heterogeneity and global value chain-related trade," IRENE Working Papers 21-08, IRENE Institute of Economic Research.
    • Handle: RePEc:irn:wpaper:21-08
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    References listed on IDEAS

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    More about this item

    Keywords

    Gravity equation; gravity model; non-tariff measures; regulatory distance; trade protection; international trade; global value chains; technical regulations.;
    All these keywords.

    JEL classification:

    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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