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Fragmentation and Gains from Trade

Author

Listed:
  • LAI, Edwin L.-C.
  • QI, Han (Steffan)
Abstract
In this paper, we estimate the competitiveness of countries in intermediate goods and in final goods. We find that China’s competitiveness in both intermediate goods and final goods increased exceptionally rapidly during 1995-2011. We also find that the gains from trade of countries with strong comparative advantage in final goods can be substantially under-estimated if we do not separately take into account trade flows in intermediate goods and final goods. We also find that, during 1995-2011, the average increase in gains from intermediate goods trade across all countries in our sample is distinctly higher than the average increase in gains from final goods trade. This suggests that gains from trade due to international fragmentation of production is becoming more important over time relative to gains from trade in final goods.

Suggested Citation

  • LAI, Edwin L.-C. & QI, Han (Steffan), 2018. "Fragmentation and Gains from Trade," Discussion paper series HIAS-E-76, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    • Handle: RePEc:hit:hiasdp:hias-e-76
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    fragmentation; gains in trade; global value chain; global sourcing;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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