Structure, Interdependence, and Evolution of Globalization Featured by GVCs

• In Event: Improving Trade Theory: Innovations in Measurement and Empirical Strategy

Abstract

Global values chains (GVCs) are the practical expressions and principal engines of today's globalization. Different from traditional trade, GVCs are mostly about combining value added at a global scale and take the perspective of reaping the benefits from international trade (Amador and Cabral, 2014). Therefore, the structure, interdependence, and dynamic of GVCs are crucial for us to understand how power is generated, distributed and wielded by states and non-state actors by levering their structural or network positions in GVCs (Dallas and Sturgeon, 2017). This paper develops novel structural, dyadic, and node-level measures of GVCs to map power relations in the dynamic of globalization, based on multi-regional input-output tables. More specifically, our measures are constructed by tracing the origins of value added in intermediate trade, with the Leontief Decomposition and extended methods by Koopman and coauthors (2010, 2014, 2017). We use two sources of IO tables, one is UNCTAD-Eora GVC Database covering more than 190 countries and economies from 1990 to 2019, and the other is the OECD Inter-Country Input-Output (ICIO) Tables of 36 sectors in 64 countries. Then, we use empirical applications to illustrate how the GVC measures improve identification in causal theories regarding trade policy changes (the changes of firms’ trade preferences by GVC linkages), investor-state dispute settlements (the bargaining power of foreign firms and host governments), and inter-state relations (GVC linkages as a coercive tool or an institution for international cooperation).

Authors

• QingQian He, Tsinghua University

• Xun Pang, Tsinghua University

• Helen V. Milner, Princeton University

• Stephen Chaudoin, Harvard University