Essays on the Trade and Macroeconomic dimensions of Global Value Chains

Abstract : The most recent phase of globalization, the so-called Global Value Chains (GVCs), is dated at the beginning of the 1990s. The birth of the World Trade Organization brought down many trade barriers and led to liberalization in areas like telecommunications, financial services, and information technologies. It meant the emergence of new business models that built on new opportunities to develop comparative advantages. With the opening of new markets, the technical revolution in IT and communications, and the closer harmonization of economic models worldwide, trade became much more than just a simple exchange of merchandise across borders. It developed into a constant flow of investment, of technologies, of goods for processing and business services. This is what has been called the "International Supply Chain". The key characteristic of this phenomenon is the increasing trade in final and intermediate goods among countries. Intermediate goods generated the network production structure of international trade and with it the exposure to new policy challenges that are not captured and fully understand by bilateral trade statistics. The existence of the international trade network, linking countries not only on the consumption side but also on production, makes the value-added content of trade to differ from gross exports. Nevertheless, it is precisely domestic value added the primary object of economic interest because it determines economic activity and the overall employment level in a country. The main question, therefore, is whether the changes in the organization of world trade should lead to a revision on our Economic intuitions. This is the purpose of this thesis, in which I review many pressing economic topics and hypotheses, and connect them with the global production patterns.This thesis covers the topics of (i) the trade-enhancing role of Free Trade Agreements (FTAs) and Information and Communication Technologies (ICT, "captured as a border effect"), (ii) value-added exports elasticities, and (iii) trade imbalances. While results for many countries are reported, I pay particular attention to the European countries. Broadly speaking, results show that (i) FTAs increase bilateral trade by 54% on average after 10 or more years, for both final goods and intermediate inputs. The border effect has become less binding over time, increasing trade in final goods an astounding 443%, relative to domestic trade since 1970, while the rise has been 195% for intermediate inputs. They also provide evidence that the trade effect of FTAs has strengthened over time. (ii) The implications of neglecting the GVC dimension for the value-added export elasticity are that it is not constant over time and lower than for gross exports. An important contribution here is to put in place a tractable framework that links changes in value-added exports to changes in the actual flow of final and intermediate goods. This makes easier to compute other tools that have been developed before in the literature like GVC Real Effective Exchange Rates (REERs). (iii) Using a value-added approach to study trade imbalances shows that we still do not have a full understanding of the causes and consequences of these imbalances and that GVC only makes it more challenging. Therefore, I disentangle the different components of the trade balance dynamics (trade performance and demand growth) while incorporating the international input-output production network linkages. Finally, I shed some light on to what extent internal devaluations are sufficient to offset the intra-Euro nominal exchange rigidity.
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Sebastián Franco Bedoya. Essays on the Trade and Macroeconomic dimensions of Global Value Chains. Economies and finances. Université Paris-Saclay, 2018. English. ⟨NNT : 2018SACLX036⟩. ⟨tel-01852294⟩

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