A Study of Global Value Chains and Regional Trade Agreements

Research Project

Project/Area Number	22K13403
Research Category	Grant-in-Aid for Early-Career Scientists
Allocation Type	Multi-year Fund
Review Section	Basic Section 07040:Economic policy-related
Research Institution	Doshisha University
Principal Investigator	朱浩良同志社大学, 総合政策科学研究科, 助手 (10906605)
Project Period (FY)	2022-04-01 – 2024-03-31
Project Status	Granted (Fiscal Year 2022)
Budget Amount *help	¥1,950,000 (Direct Cost: ¥1,500,000、Indirect Cost: ¥450,000) Fiscal Year 2023: ¥1,040,000 (Direct Cost: ¥800,000、Indirect Cost: ¥240,000) Fiscal Year 2022: ¥910,000 (Direct Cost: ¥700,000、Indirect Cost: ¥210,000)
Keywords	Trade agreements / Trade efficiency / global value chains / trade agreements / efficiency
Outline of Research at the Start	The development of global value chains (GVCs) has changed the landscape of global production patterns. Additionally, the increasing number of regional trade agreements (RTAs) has contributed to the prevalence of GVCs. This study aims to examine the trade efficiency in GVC participation and quantify the impacts of RTAs on trade efficiency. This study will use a stochastic gravity model to estimate the efficiency of trade and GVC participation measured by value-added content in trade. The results show how the establishment of RTAs affects the efficiency of trade and GVC participation.
Outline of Annual Research Achievements	This study aims to analyze trade efficiency in the context of Global Value Chains (GVC) participation and measure the impact of regional trade agreements (RTAs) on trade efficiency. The research will utilize a stochastic gravity model to estimate trade efficiency, which reflects the gap between actual and potential linkages in a frictionless world. Additionally, the study will investigate how the establishment of RTAs affects trade efficiency by considering countries' participation in GVCs. This empirical evidence will contribute to understanding the potential for further trade integration. The first stage of this research has successfully measured trade efficiency in East Asia and examined the impact of RTAs on trade efficiency. The estimation results indicate that RTAs generally improve trade efficiency among member countries in East Asia. Furthermore, I explored changes in trade efficiency between member and non-member countries, contributing to the understanding of trade diversion effects resulting from RTA formation. The results reveal that export diversion due to RTAs is uncommon in East Asia. However, the analysis indicates that imports of ASEAN countries tend to divert away from non-members.
Current Status of Research Progress	Current Status of Research Progress 2: Research has progressed on the whole more than it was originally planned. Reason Presentation: “Global value chains and the determinants of regional trade agreements.” Japan Society of International Economics. October 2022, the 81st Annual Meeting, Kindai University, Japan. Paper: Zhu, Haoliang (2023). “The impact of regional trade agreements on trade efficiency in East Asia: a stochastic frontier gravity approach.” Applied Economics Letters, advanced online publication.
Strategy for Future Research Activity	This research project member will continue presenting and refining the research results obtained over the past year. Additionally, the project will delve into the depth of trade agreements. Building on the analysis conducted in the first stage, this research project aims to unravel the significance of specific sets of provisions within trade agreements. It will identify the provisions or types of provisions that enhance trade efficiency.