‘New Age’ Preferential Trade Agreements and Global Value Chains: A Comparative Sectoral Analysis

The past three decades witnessed a simultaneous proliferation in the number of preferential trade agreements (PTAs) and the network of global value chains (GVCs). The rise in the number of PTAs has been accompanied by inclusion of ‘deeper’ provisions such as services, competition, intellectual property rights (IPR), etc. This study aims to explain the differential impact PTA ‘depth’ on trade in value added as well as the heterogeneous results observed across industries based on their distinctive characteristics. For this purpose, an augmented gravity equation with three-way fixed effects is estimated, using a relatively newer dataset for the time period 2000-2015 for 64 countries. The results conclude that the PTA ‘depth’ determined by nontariff and ‘behind-the-border’ provisions leads to greater participation of member countries in GVCs. Furthermore, it is shown that value added trade for a sector like automotive, which has higher product differentiation, intra-industry trade, IPR and FDI linkages is most impacted by the PTA ‘depth’.

Innovation and Competitiveness in Mining Value Chains in Latin America

This paper provides an international overview of the mining global value chain (GVC) and its most recent transformations and trends, focusing on Argentina, Brazil, and Peru. The study uses international trade data and patent and scientific publications data. By using trade in value added, we first investigate the role of those countries in the international mining trade, and their specialization, participation, and position in the mining GVC for the period 2005-15. The analysis is carried out for both mining products and mining-related services, and also looks at the contribution of services to mining exports. Second, we analyze the evolution of innovative activity and the direction of technological change in the mining sector over the past 40 years by looking at patent applications, both internationally and with attention to the three target countries. We also provide an overview of, and some insights on, knowledge flow in the mining sector based on scientific production.

‘New-Age’ Preferential Trade Agreements and Global Value Chains: An Empirical Analysis

This article analyses the impact of the ‘depth’ of new-age preferential trade agreements (PTAs) signed by nations on value-added trade as well as trade in final and intermediate goods carried out between them. This objective of this article goes beyond the black-boxing of a PTA through a dummy and aims to focus on the ‘depth’ of a PTA as measured by its provisions and content. For this purpose, we construct an intensive panel data set. The data set spans across 6 years (3-year intervals across 2000–2015) and is constructed on a dyadic (country pair) level for 61 countries and 110 PTAs across the world, using the Trade in Valued Added (TiVA) Database from Organisation for Economic Co-operation and Development (OECD) and Content of Deep Trade Agreements database from World Bank. Further, we construct two indices for measuring the ‘depth’ of the PTAs based on their content. Our study uses augmented gravity equation with three-way fixed effects, namely country pair, exporter time and importer time, for estimating the results. Our results indicate that the ‘depth’ of a PTA significantly affects trade in final goods, intermediate goods and value-added trade, and the impact is highest for trade in value added. We also observe that PTA with greater number of provisions has a higher impact on trade in final goods, intermediate goods as well as trade in value added.

Structural Change in Exports

Trade analysis on the basis of countries’ export baskets can be misleading when production is globally fragmented. The chapter argues for a switch to an analysis of the type of activities that are embodied in exports. The chapter discusses two steps towards this goal. It first discusses the transition in trade studies from product to vertical specialization. A country’s vertical specialization in trade is measured as the share of domestic value added in its gross exports. The chapter identifies three waves of vertical specialization in the world economy since 1970 and documents the servicification of manufacturing exports. Results from cross-country analysis show a robust association between specialization and productivity growth, but not between specialization and employment growth. Next, the chapter considers functional specialization in trade based on the measurement of distinct activities in exports such as fabrication, marketing and R&D, based on an occupational classification of workers. It documents how advanced economies continued to specialize in headquarter activities, while quickly moving out of fabrication activities. It also shows that there are many idiosyncratic determinants of a country’s specialization pattern beyond its general development level. The chapter ends with suggestions for further research, given that the measures of trade in value added and activities presented are still in a development phase.

The influence of regional preferential trade agreements on international manufacturing trade in value-added: Based on the complex network method

Based on a new trade accounting method—the trade in value-added accounting method—this paper constructs the international manufacturing trade in value-added networks and preferential trade agreement (PTA) networks and uses the complex network analysis method to explore the relations between PTA and international manufacturing trade in value-added from the perspective of the global value chain. The results are as follows: (1) Over the years, the international manufacturing trade in value-added networks and PTA networks has shown a significant clustering effect, and the size of networks has grown rapidly. (2) The TEX, DVA and FVA networks of the international manufacturing value added trade over the years can be divided into two societies in the Asia-Pacific region and the European region. This division just reflects the different modes of division of labor in the manufacturing value chain of the two major economic regions in the world. (3) QAP analysis shows that the influencing factors of the traditional gravity model can still explain the manufacturing trade network and its value-added trade network, while the influence of economic globalization, the enlargement of the EU and the internationalization strategy of enterprises, the PTA network and manufacturing value-added the relationship between trade networks changed from positive to negative in 2004.