Econometrica, Vol. 88, No. 4 (July, 2020), 1553–1598
ON THE GEOGRAPHY OF GLOBAL VALUE CHAINS
POL ANTRàS
Department of Economics, Harvard University and NBER
ALONSO DE GORTARI
This paper develops a multi-stage general-equilibrium model of global value chains
(GVCs) and studies the specialization of countries within GVCs in a world with barriers
to international trade. With costly trade, the optimal location of production of a given
stage in a GVC is not only a function of the marginal cost at which that stage can
be produced in a given country, but is also shaped by the proximity of that location
to the precedent and the subsequent desired locations of production. We show that,
other things equal, it is optimal to locate relatively downstream stages of production
in relatively central locations. We also develop and estimate a tractable, quantifiable
version of our model that illustrates how changes in trade costs affect the extent to
which various countries participate in domestic, regional, or global value chains, and
traces the real income consequences of these changes.
KEYWORDS: Global value chains, sequential production, specialization, gains from
trade, trade costs.