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Do we need deeper trade agreements for GV Cs or just a BIT?
Author(s) -
Boffa Mauro,
Jansen Marion,
Solleder Olga
Publication year - 2019
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12766
Subject(s) - value (mathematics) , negotiation , economics , investment (military) , international trade , international economics , variety (cybernetics) , gravity model of trade , transmission (telecommunications) , computer science , law , telecommunications , political science , machine learning , artificial intelligence , politics
The paper investigates two policies geared towards stimulating and shaping global value chains (GVCs), namely deep regional trade agreements (DRTAs) and bilateral investment treaties (BITs). In an augmented gravity model, we test the impact of both policies on a variety of trade in value added indicators. We find that both policies are likely to increase GVC trade, although their transmission channels differ. While backward linkages are stimulated through both BITs and DRTAs, forward linkages respond only to DRTAs. The estimates suggest that negotiating a DRTA with investment provisions has a higher impact on trade in value added than signing a shallow RTA and a separate BIT.