Upgrading the global value chain with regime-wide rules of origin

ABSTRACT

Participation in the global value chain (GVC) is defined as the value added contained in exports, looking both backward and forward from a reference nation. This article applies the gravity model to investigate the effects of the regime-wide rules of origin (RoO), including diagonal cumulation, de minimis, and self-certification requirements, on GVC participation with 40,568 observations covering 61 countries from 2005–2015. Our main finding is that the liberal RoO can help upgrade both types of GVC participation.

KEYWORDS:

• FTAs
• global value chain
• rules of origin
• gravity model

JEL CLASSIFICATION:

• C23
• F15

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ CU is used to escape from selection bias problem as CU does not depend on RoO.

² See Kowalski et al. (2015) for further interpretation of the relationship between these control variables and GVC participation.

³ The results are available upon request.

Additional information

Funding

This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) [grant number 502.01-2019.301].