Deeper Regional Integration and Global Value Chains

Recently, international trade has become regional rather than global. This study aims to test if deep regional integration contributes to the organization of global value chains centered around the regional clusters. We use data on not only trade in value added but also global value chain participation indexes that reflect the global value chains better than domestic value added in exported goods and services. Estimation results reveal that a deep regional trade agreement (RTA) has heterogeneous effects on global value chains depending on the regional clusters. In particular, Asia imports more intermediate goods than Europe and America, while RTA member countries tend to import more intermediate goods from Europe than Asia and America