Value chain integration and the political economy of trade liberalization

• Main Author: Tan, Terence Qi Yan
• Other Authors: Deborah Kay Elms
• Format: Theses and Dissertations
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::International business::International trade
• Online Access: http://hdl.handle.net/10356/65020
• Institution: Nanyang Technological University

Increased economic interdependence and integration in a globalized era have seen a fundamental change in the nature of production. Countries are increasingly specializing in and adding value to different stages of production for different goods and services. Such a process of value chain integration have created a complex web of Global Values Chains (GVCs) that span the world. At the same time, there has been a global movement towards trade liberalization. Why have countries liberalized trade as they become more integrated in GVCs? I argue that value chain integration alters firm preferences towards being less protectionist, who then lobby and influence politicians to make trade policy more open. In short, value chain integration causes trade liberalization. Using a quantitative study, I show strong but partial evidence for my central claim. With increasing value chain integration, liberalization occurs in 2 out of 3 trade policy instruments.