Trade Integration, Global Value Chains, and Capital Accumulation / Michael Sposi, Kei-Mu Yi, Jing Zhang.

Format:

Book

Author/Creator:

Sposi, Michael.

Contributor:

National Bureau of Economic Research.

Yi, Kei-Mu.

Zhang, Jing.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28087.

NBER working paper series no. w28087

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Motivated by increasing trade and fragmentation of production across countries, accompanied by income convergence by many emerging economies, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. Via Heckscher-Ohlin forces, GVC trade can generate back-and-forth feedback between comparative advantage and capital accumulation (growth). Moreover, GVC trade increases both steady-state and dynamic gains from trade.

Notes:

Print version record

November 2020.