The Role of Trade Costs in Global Production Networks : Evidence from China’s Processing Trade Regime

Ma, Alyson C. ; Van Assche, Ari

关键词: ADVANCED COUNTRIES;    ADVANCED COUNTRY;    ADVANCED ECONOMIES;    APPAREL;    ASSETS;   

DOI  :  10.1596/1813-9450-5490
RP-ID  :  WPS5490

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

In a seminal contribution, Yi (2003) hasshown that vertically specialized trade should be moresensitive to changes in trade costs than regular trade. Yetempirical evidence of this remains remarkably scant. Thispaper uses data from China's processing trade regime toanalyze the role of trade costs on trade within globalproduction networks (GPNs). Under this regime, firms aregranted duty exemptions on imported inputs as long as theyare used solely for export purposes. As a result, the dataprovide information on trade between three sequential nodesof a global supply chain: the location of input production,the location of processing (in China) and the location offurther consumption. This makes it possible to examine therole of both trade costs related to the import of inputs(upstream trade costs) and trade costs related to the exportof final goods (downstream trade costs) on intra-GPN trade.The authors show that intra-GPN trade differs from regulartrade in that it not only depends on downstream trade costs,but also on upstream trade costs and the interaction ofboth. Moreover, intra-GPN trade is more sensitive to oilprice movements and business cycle movements than regulartrade. Finally, the paper analyzes three channels throughwhich intra-GPN trade have amplified the trade collapseduring the recent Global Recession.