Global Value Chains and the Fragmentation of Trade Policy Coalitions

30 Pages Posted: 11 Jun 2020

See all articles by Ari Van Assche

Ari Van Assche

HEC Montreal; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Byron Gangnes

University of Hawaii - Department of Economics

Date Written: April 26, 2019

Abstract

Recent decades have seen the emergence of global value chain (GVC) production arrangements in which firms fine-slice production processes and disperse activities over multiple countries. This paper analyses how the rise of GVCs affects trade politics in developed countries. Our theoretical model shows that GVCs drive a wedge between the interests of workers and of managers in unskilled-labour-intensive industries, upsetting a traditional coalition that has favoured protectionism against competing imports. Managers of GVC firms switch towards favouring trade promotion since they can substitute foreign for local unskilled workers. The loss of their management ally further weakens the position of low-skilled workers, whose jobs and income are threatened by foreign competition. This new trend may help to explain the recent surge in anti-trade sentiment, while indicating the importance of an active policy response to deal with the economic challenges for affected workers.

Keywords: global value chains, trade policy, coalition, trade politics

Suggested Citation

Van Assche, Ari and Gangnes, Byron, Global Value Chains and the Fragmentation of Trade Policy Coalitions (April 26, 2019). Transnational Corporations Journal, Vol. 26, No. 1, 2019, Available at SSRN: https://ssrn.com/abstract=3621990

Ari Van Assche (Contact Author)

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Byron Gangnes

University of Hawaii - Department of Economics ( email )

Honolulu, HI 96822
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
17
Abstract Views
32
PlumX Metrics