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  5. New Developments in Global Value Chains
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New Developments in Global Value Chains

Paper Session

Saturday, Jan. 6, 2024 10:15 AM - 12:15 PM (CST)

Convention Center, 225A
Hosted By: American Economic Association
  • Chair: Pol Antras, Harvard University

Vertical Spillovers in Global Value Chains

Swapnika Rachapalli
,
University of British Columbia

Abstract

This paper explores whether countries' production capabilities improve in response to export shocks. I apply the detailed input-output table across highly disaggregated products constructed in Rachapalli (2021) to bilateral trade data to obtain the set of upstream inputs and the set of downstream outputs for every product traded. Using this information, the paper establishes two empirical regularities in the data. First, countries are likely to have RCA in a product if they also have RCA in products that are upstream or downstream to that product. Second, the RCA of a product can improve over time if the country experiences exogenous demand shocks to its inputs or outputs. This suggests that countries can benefit from being integrated as suppliers into the global production network by improving their capabilities across new stages of production within the value chain.

Export-Platform FDI: Cannibalization or Complementarity?

Pol Antras
,
Harvard University
Evgenii Fadeev
,
Duke University
Teresa Fort
,
Dartmouth College
Felix Tintelnot
,
University of Chicago

Abstract

This paper explores conditions under which a model of export-platform FDI generates cannibalization effects. We first develop a baseline model in which final goods are produced only with labor and there are no fixed costs of exporting. Perhaps surprisingly, this model does not necessarily generate cannibalization effects. The key condition that determines whether an MNE's plant sales across locations are substitutes or complements depends on whether the goods produced by the MNE's plants are more or less substitutable than the goods produced by other firms. We then introduce destination-specific fixed costs of exporting that are incurred at the firm level, and show that this extension expands the range of parameter values for which the model delivers complementarity across MNEs' production locations. Finally, we introduce tradable intermediate inputs and show that whenever global sourcing entails firm-by-country-specific fixed costs of sourcing shared across all the MNE's plants, the range of parameter values for which assembly location decisions are complements is again expanded.

Global Value Chains: Firm Level Evidence from the U.S.

Aaron Flaaen
,
Federal Reserve Board
Fariha Kamal
,
U.S. Census Bureau
Eunhee Lee
,
Seoul National University
Kei-Mu Yi
,
University of Houston

Abstract

Using confidential business data from the U.S. Census Bureau, we measure the extent of international inputs embodied in U.S. exports at the level of the establishment and firm, providing a new way to characterize global value chains (GVCs) in the United States. A direct link between imported inputs and exports at the level of firms and establishments provides a natural benchmark against which alternative measures of GVCs—such as those built from combining national-level input-output tables—can be assessed. Such comparisons yield insights on the role of aggregation bias, proportionality assumptions, and the intermediate vs final goods classification of imports. This new data resource provides a novel window into the complex ways U.S. firms are simultaneously linked to multiple markets through foreign sourcing and foreign sales.

Discussant(s)
Xiang Ding
,
Georgetown University
Ayumu Ken Kikkawa
,
University of British Columbia
Rudolfs Bems
,
International Monetary Fund
JEL Classifications
  • F1 - Trade