Modeling global value chains: approaches and insights from economics

Davin Chor
DOI number
#Trade and FDI

Additional info: Eds: Stefano Ponte, Gary Gereffi & Gale Raj-Reichert, chapter 5, pp.105-118.

In recent years, the emergence of global value chains in how firms organize their production strategies has drawn the attention of economists, particularly those in the field of international trade. This has spawned a growing body of applied theoretical work to capture the fragmentation of production and sourcing decisions across country borders. This chapter overviews this literature on economic models that speak to the broad phenomenon of global production. It elucidates the core modeling approaches that have been developed to understand the drivers behind these decisions, as well as their consequences for trade flows, labor markets, and aggregate welfare. The chapter also highlights how this modeling work complements key themes that have been developed in the broader social science literature on global value chains.

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