Global Supply Chains and Trade Policy

How do global supply chain linkages modify countries' incentives to impose import protection? Are these linkages empirically important determinants of trade policy? To address these questions, this paper introduces supply chain linkages into a workhorse terms-of-trade model of trade policy with political economy. Theory predicts that discretionary final goods tariffs will be decreasing in the domestic content of foreign-produced final goods. Provided foreign political interests are not too strong, final goods tariffs will also be decreasing in the foreign content of domestically-produced final goods. The paper tests these predictions using newly assembled data on bilateral applied tariffs, temporary trade barriers, and value-added contents for 14 major economies over the 1995-2009 period. There is strong support for the empirical predictions of the model. The results imply that global supply chains matter for trade policy, both in principle and in practice.

Bibliographic Details

Main Authors:	Blanchard, Emily J., Bown, Chad P., Johnson, Robert C.
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2016-01
Subjects:	TARIFFS, EXPORT SUPPLY, URUGUAY ROUND, MULTILATERAL TRADE, WORLD TRADE ORGANIZATION, PRODUCTION, TRADE NEGOTIATIONS, REGIONAL TRADE AGREEMENTS, FOREIGN INVESTORS, TRADE POLICY INSTRUMENTS, INCOME, GRAVITY VARIABLES, PREFERENTIAL AGREEMENT, FOREIGN PRODUCERS, TRADE BARRIERS, EXPORTS, ELASTICITY, TRADE FLOWS, EXPORTERS, POLITICAL ECONOMY, WELFARE, INCENTIVES, ECONOMIC POLICY, EQUILIBRIUM, FREE TRADE AGREEMENTS, VARIABLES, FACTORS OF PRODUCTION, PREFERENTIAL MARKET ACCESS, INPUTS, DUMPING, RETURNS TO SCALE, PAYMENTS, MARKET ACCESS, FREE TRADE, EXPORT SUBSIDIES, TRENDS, PREFERENTIAL ACCESS, TRADE AGREEMENTS, FINAL GOODS, TRADE PATTERNS, GROSS EXPORTS, PREFERENTIAL TRADE AGREEMENTS, FOREIGN PRODUCTION, ABSOLUTE VALUE, CONSUMER SURPLUS, DEVELOPMENT ECONOMICS, FOREIGN SUPPLIERS, DOMESTIC PRODUCERS, PRIMARY FACTORS, RENT, REGIONAL TRADE, ANTIDUMPING, CONSTANT RETURNS TO SCALE, BASE YEAR, ECONOMETRICS, EXTERNALITIES, IMPORT PROTECTION, WTO, BILATERAL AGREEMENTS, WORLD PRICES, ACCESS, ECONOMIC POLICIES, TRADE POLICY, QUANTITATIVE RESTRICTIONS, IMPORT PENETRATION, EXPORT TAXES, UTILITY, TRADE AGREEMENT, END USE, INTERNATIONAL TRADE POLICY, TRADE MOTIVES, TAXES, TRADE EXTERNALITIES, APPLIED TARIFF, EXTERNALITY, CONSUMPTION, HUMAN CAPITAL, VALUE ADDED, TRADE PREFERENCES, REGIONALISM, INTERNATIONAL TRADE, TRADE COSTS, WORKER RIGHTS, VALUE, FOREIGN DIRECT INVESTMENT, FORMAL ANALYSIS, CONCESSIONS, FOREIGN INVESTMENT, TRADE PROTECTION, NATIONAL INCOME, UTILITY FUNCTION, EXPORT SHARES, SAFEGUARD MEASURES, ECONOMY, AGRICULTURE, CONSUMERS, INPUT-OUTPUT TABLES, FREE TRADE AREAS, MEASUREMENT, GROSS OUTPUT, BENCHMARK, ECONOMIC THEORY, TRADE LIBERALIZATION, MULTILATERAL TRADE LIBERALIZATION, ENDOGENOUS VARIABLES, TERMS OF TRADE, PREFERENTIAL TREATMENT, RECIPROCITY, TRADE DIVERSION, CAPITAL GOODS, TRADE DATA, TRADE, BILATERAL IMPORTS, GDP, TRADE PARTNERS, GOODS, THEORY, IMPORT BARRIERS, GENERALIZED SYSTEM OF PREFERENCES, BILATERAL TRADE, DOMESTIC PRODUCTION, CUSTOMS UNIONS, APPAREL INDUSTRY, INPUT TRADE, PREFERENTIAL TRADE, TARIFF, SUPPLY, REVENUE, NASH EQUILIBRIUM, IMPORT QUANTITIES, WORLD TRADE, BILATERAL TRADE DATA, ARBITRAGE, INTERMEDIATE INPUTS, APPAREL, OUTCOMES, DOMESTIC SUPPLIERS, DOMESTIC INDUSTRY, PRICES, FOREIGN GOODS, DEVELOPMENT POLICY,
Online Access:	http://documents.worldbank.org/curated/en/2016/01/25801220/global-supply-chains-trade-policy http://hdl.handle.net/10986/23702
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