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

Ma, Alyson C.; Van Assche, Ari

dc.creator	Ma, Alyson C.
dc.creator	Van Assche, Ari
dc.date	2012-03-19T18:43:07Z
dc.date	2012-03-19T18:43:07Z
dc.date	2010-12-01
dc.date.accessioned	2023-02-17T21:06:54Z
dc.date.available	2023-02-17T21:06:54Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101201135542
dc.identifier	http://hdl.handle.net/10986/3973
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/244943
dc.description	In a seminal contribution, Yi (2003) has shown that vertically specialized trade should be more sensitive to changes in trade costs than regular trade. Yet empirical evidence of this remains remarkably scant. This paper uses data from China's processing trade regime to analyze the role of trade costs on trade within global production networks (GPNs). Under this regime, firms are granted duty exemptions on imported inputs as long as they are used solely for export purposes. As a result, the data provide information on trade between three sequential nodes of a global supply chain: the location of input production, the location of processing (in China) and the location of further consumption. This makes it possible to examine the role of both trade costs related to the import of inputs (upstream trade costs) and trade costs related to the export of final goods (downstream trade costs) on intra-GPN trade. The authors show that intra-GPN trade differs from regular trade in that it not only depends on downstream trade costs, but also on upstream trade costs and the interaction of both. Moreover, intra-GPN trade is more sensitive to oil price movements and business cycle movements than regular trade. Finally, the paper analyzes three channels through which intra-GPN trade have amplified the trade collapse during the recent Global Recession.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 5490
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ADVANCED COUNTRIES
dc.subject	ADVANCED COUNTRY
dc.subject	ADVANCED ECONOMIES
dc.subject	APPAREL
dc.subject	ASSETS
dc.subject	BARRIER
dc.subject	BENCHMARK
dc.subject	BENCHMARK SPECIFICATION
dc.subject	BILATERAL FLOWS
dc.subject	BILATERAL TRADE
dc.subject	BILATERAL TRADE BARRIERS
dc.subject	BUDGET CONSTRAINTS
dc.subject	BUSINESS CYCLE
dc.subject	BUSINESS CYCLE FLUCTUATIONS
dc.subject	BUSINESS CYCLES
dc.subject	CHANGES IN TRADE
dc.subject	COMMODITY
dc.subject	COMPETITIVE CONDITIONS
dc.subject	COMPETITIVENESS
dc.subject	CONSUMERS
dc.subject	CONTROL VARIABLES
dc.subject	COST STRUCTURE
dc.subject	COUNTRY OF ORIGIN
dc.subject	CURRENCY
dc.subject	CURRENCY UNION
dc.subject	CURRENT ACCOUNT
dc.subject	CURRENT ACCOUNT DEFICITS
dc.subject	CURRENT ACCOUNT SURPLUSES
dc.subject	CUSTOMS
dc.subject	CUSTOMS REGIME
dc.subject	DEPENDENT VARIABLE
dc.subject	DEVELOPING COUNTRIES
dc.subject	DISTORTION
dc.subject	DOMESTIC CONSUMPTION
dc.subject	DOMESTIC INPUTS
dc.subject	DOMESTIC MARKET
dc.subject	DUMMY VARIABLE
dc.subject	DURABLE GOODS
dc.subject	ECONOMIC COOPERATION
dc.subject	ECONOMIC CRISIS
dc.subject	ECONOMIC GEOGRAPHY
dc.subject	ECONOMIC GROWTH
dc.subject	ECONOMIC OUTLOOK
dc.subject	ECONOMIC POLICY
dc.subject	ECONOMIC RESEARCH
dc.subject	ECONOMIC SHOCKS
dc.subject	ELASTICITY
dc.subject	ELASTICITY OF SUBSTITUTION
dc.subject	ELECTRONICS INDUSTRY
dc.subject	ENDOGENOUS VARIABLES
dc.subject	EQUATIONS
dc.subject	EQUILIBRIUM
dc.subject	ERROR TERM
dc.subject	EXPORT DEMAND
dc.subject	EXPORT GOOD
dc.subject	EXPORT PROCESSING
dc.subject	EXPORT PROCESSING ZONES
dc.subject	EXPORT PROMOTION
dc.subject	EXPORT PROMOTION POLICIES
dc.subject	EXPORT VALUE
dc.subject	EXPORTER
dc.subject	EXPORTS
dc.subject	EXTERNAL DEMAND
dc.subject	FINAL GOODS
dc.subject	FIXED COSTS
dc.subject	FIXED EFFECTS
dc.subject	FOREIGN DIRECT INVESTMENT
dc.subject	FOREIGN FIRM
dc.subject	FOREIGN FIRMS
dc.subject	FOREIGN MARKET
dc.subject	FREE ENTRY
dc.subject	GDP
dc.subject	GDP PER CAPITA
dc.subject	GENERAL EQUILIBRIUM
dc.subject	GEOGRAPHIC DISTRIBUTION
dc.subject	GLOBAL ECONOMY
dc.subject	GLOBAL IMBALANCES
dc.subject	GLOBAL TRADE
dc.subject	GLOBALIZATION
dc.subject	GRAVITY MODEL
dc.subject	GRAVITY MODELS
dc.subject	GRAVITY VARIABLES
dc.subject	HOME COUNTRY
dc.subject	IMBALANCE
dc.subject	IMPACT OF TRADE
dc.subject	IMPORT
dc.subject	IMPORT CONTENT
dc.subject	IMPORT GROWTH
dc.subject	IMPORTS
dc.subject	INCOME
dc.subject	INCOME ELASTICITY
dc.subject	INCOMPLETE CONTRACTS
dc.subject	INDIVIDUAL FIRM
dc.subject	INEQUALITY
dc.subject	INFORMATION TECHNOLOGY
dc.subject	INPUT-OUTPUT TABLES
dc.subject	INSTRUMENTAL VARIABLES
dc.subject	INTERMEDIATE GOODS
dc.subject	INTERMEDIATE INPUTS
dc.subject	INTERNATIONAL BUSINESS
dc.subject	INTERNATIONAL COMPETITIVENESS
dc.subject	INTERNATIONAL ECONOMICS
dc.subject	INTERNATIONAL ECONOMY
dc.subject	INTERNATIONAL FINANCIAL STATISTICS
dc.subject	INTERNATIONAL TRADE
dc.subject	INTERNATIONAL TRADE STATISTICS
dc.subject	INTERNATIONAL TRANSPORTATION
dc.subject	INVENTORIES
dc.subject	MARGINAL COST
dc.subject	MARKET ACCESS
dc.subject	MARKET SHARE
dc.subject	MARKET SIZE
dc.subject	MEASURE OF TRADE
dc.subject	MULTINATIONAL BUSINESS
dc.subject	MULTINATIONAL FIRMS
dc.subject	NET EXPORTS
dc.subject	NON-TARIFF BARRIERS
dc.subject	OIL PRICE
dc.subject	OIL PRICES
dc.subject	OIL-EXPORTING COUNTRIES
dc.subject	ORGANIZATIONAL FORM
dc.subject	OUTPUT
dc.subject	OUTSOURCING
dc.subject	POLITICAL ECONOMY
dc.subject	POVERTY REDUCTION
dc.subject	PRICE HIKES
dc.subject	PRICE MOVEMENTS
dc.subject	PRICE OF OIL
dc.subject	PRODUCTION COSTS
dc.subject	PRODUCTIVITY
dc.subject	PROFIT FUNCTIONS
dc.subject	PROTECTIONISM
dc.subject	PROTECTIONIST
dc.subject	RAPID GROWTH
dc.subject	RE-EXPORTS
dc.subject	RECESSION
dc.subject	REDUCTION IN TARIFFS
dc.subject	REGIONAL TRADE
dc.subject	REGIONALISM
dc.subject	ROBUSTNESS CHECK
dc.subject	SLOWDOWN
dc.subject	SOURCING
dc.subject	TARIFF BARRIERS
dc.subject	TECHNOLOGY TRANSFER
dc.subject	TOTAL EXPORTS
dc.subject	TOTAL IMPORTS
dc.subject	TRADE BARRIERS
dc.subject	TRADE COSTS
dc.subject	TRADE DATA
dc.subject	TRADE FLOWS
dc.subject	TRADE INTEGRATION
dc.subject	TRADE INTENSITY
dc.subject	TRADE MODEL
dc.subject	TRADE MORE
dc.subject	TRADE PATTERN
dc.subject	TRADE PATTERNS
dc.subject	TRADE PERFORMANCE
dc.subject	TRADE REGIME
dc.subject	TRADE STRUCTURE
dc.subject	TRADE SURPLUS
dc.subject	TRADING PARTNER
dc.subject	TRADING PARTNERS
dc.subject	TRANSPORT COSTS
dc.subject	TRANSPORTATION COSTS
dc.subject	UNCERTAINTY
dc.subject	UNIT OF LABOR
dc.subject	UTILITY FUNCTION
dc.subject	VALUE ADDED
dc.subject	VERTICAL SPECIALIZATION
dc.subject	VOLATILITY
dc.subject	WAGES
dc.subject	WORLD ECONOMY
dc.subject	WORLD MARKETS
dc.subject	WORLD TRADE
dc.subject	WORLD TRADE ORGANIZATION
dc.title	The Role of Trade Costs in Global Production Networks : Evidence from China’s Processing Trade Regime
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	East Asia and Pacific
dc.coverage	East Asia and Pacific
dc.coverage	East Asia
dc.coverage	Asia
dc.coverage	China