Export Promotion Policy in the Age of Global Value Chains

Dr. Svetlana Ledyaeva (Aalto University, Department of Economics, Centre for Markets in Transition)

Dr. Ledyaeva will discuss her paper on the topic of Export Promotion Policy in the Age of Global Value Chains. This study examines how domestic export promotion policies affect foreign countries' exports in the presence of global value chains.

We argue that in addition to negative "competition for market share" effect proposed by strategic trade theory in the absence of trade in intermediates, there can be positive effects, which emerge due to backward and forward linkages inside global value chains via trade in intermediates. We build a framework which describes and summarizes these effects based on previous relevant studies separating them for final and intermediate goods' foreign exports depending on the type of good (final versus intermediate) targeted by domestic export incentive. We empirically test this framework for the BRICs bloc. In particular, we study how export incentives implemented in one BRIC country affect exports of the other three BRIC countries. Though our empirical evidence suggests that negative effects still prevail, we find rather strong evidence on positive effects as well. Positive effects are especially strong between China and India.

A seminar hosted by the UCL SSEES Centre for Comparative Studies of Emerging Economies.

Convenor: Dr Elodie Douarin