Vertical Gravity
Posted: 2 Apr 2014
There are 2 versions of this paper
Vertical Gravity
Date Written: April 2, 2012
Abstract
Vertical gravity deploys as the dependent variable a newly developed indicator of production sharing and processing trade among country pairs. The intensity of this relationship among 73 countries between 1998 and 2005 is assessed in a standard fixed-effects panel setting, with particular focus on trade policy. We find that joint adherence to a preferential trade agreement is associated with a considerably higher degree of processing trade among country pairs, and that such trade is also premised on a lower tariff environment compared to countries that integrate less strongly.
Keywords: Global value chains, vertical trade, gravity analysis, factory Asia
JEL Classification: F15, F23, C82
Suggested Citation: Suggested Citation
