Trade agreements and participation in global value chains: Empirical evidence from Latin America

Sanguinet, Eduardo Rodrigues; Alvim, Augusto Mussi; Atienza, Miguel


The rise of global sourcing implies a heterogeneous relationship between buyers and suppliers regarding the liberalisation scenarios in emerging countries. This paper analyses the effect of regional trade agreements (RTAs) on participation in the Global Value Chains of Latin American countries between 1995 and 2015. We combine the framework of gravity equations with the trade in value-added, applying a Pseudo Poisson Maximum Likelihood (PPML) estimator with panel data and fixed effects to deal with endogeneity and heteroscedasticity. Heterogeneous estimations show that the deepest RTAs reinforce the position of lower technology-industry suppliers, driven by an extra-regional strategy of Latin American trade policy. The geography of value chains has little effect on industrial upgrading in the region, reducing the development potential. The study concludes that the region's trade policy could reduce the dependent relationship between distant partners and pay more attention to creating shorter value chains as a strategy to generate local capacities to gain competitiveness in value chains.

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Título según WOS: ID WOS:000693326600001 Not found in local WOS DB
Título de la Revista: WORLD ECONOMY
Editorial: Wiley
Fecha de publicación: 2021


Notas: ISI