Implications of participation in global value chains for international trade network

ABSTRACT

This paper investigates the relationship between participations of countries in Global Value Chains (GVCs) and their positions in the International Trade Network (ITN). Our estimates indicate that there is a strong relationship between the GVC participation and the network position of a country. We find that forward participation is associated with more clustered but fewer trade links, whereas backward participation is associated with less clustered but more trade links. We then interpret these results by expressing the background of value chains, and this provides us a clear understanding for the nexus between GVCs and ITN.

KEYWORDS:

• International trade
• network analysis
• global value chains
• participation rates

JEL CLASSIFICATION:

• D57
• F14
• L14

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ See, Head, Mayer, and Ries (2010), Mayer and Zignago (2011), and Gaulier and Zignago (2010), for CEPII datasets used in this paper.

² Taken from Newman (2018).

³ See, Lenzen et al. (2012), Lenzen et al. (2013), and Casella et al. (2019).