Trade Liberalization in APEC and Global Value Chain Participation: What Can Value Added Indicators Tell?

Abstract

The manner in which trade is occurring has been evolving. A most notable development is the international fragmentation of countries as countries and industries are increasingly contributing elements to a final product rather than completing the production activity solely within domestic boundaries. Underpinning these changes have been advances in technology and logistics performance facilitating the breakup of economic activity (Baldwin, 2012(Baldwin, , 2016. International production networks, commonly described as global value chains (GVCs), thus extend beyond the bilateral trading relationships that may be observed between two countries and that are often the focus of policymakers and commentators (see, e.g., OECD, 2013; de Backer and Mirodout, 2013;

Import competition and sustainable development of global value chains: Evidence from China

“…Some literature focuses on the relationship between trade opening and GVCs, ignoring the competition in trade. Although Aichele and Heiland (2018) and Flaig and Greenville (2021) think that import trade opening strengthens the GVC linkages between China and other countries, Humphrey and Schmitz (2002) and Sun and Grimes (2016) put forward that China mainly participates in the low domestic value-added segments in GVCs, which is not beneficial for long-term development. Harrison (1994) also finds that ignoring competition results in biased estimates when studying the relationship between trade opening and productivity growth.…”