Essays on the Political Economy of Trade Policy Views and Global Value Chains

<p dir="ltr">This dissertation contains three essays on international trade. In the first essay, I examine the role of consumer exposure to international trade, along with other potential determinants indicated by international trade theories, in U.S. citizens’ trade policy views in 2016. Using a logistic model, I find that the consumer exposures to trade measures calculated using global trade data are not significant predictors of trade policy views. Furthermore, regression results with expenditure-weighted import penetration ratio calculated using Mexican versus Chinese import data show mixed patterns. While a higher expenditure-weighted import penetration ratio for imported consumption goods from Mexico is associated with a lower likelihood of support for protectionism, the same measure calculated using Chinese import data is not significantly associated with U.S. individuals’ trade policy preferences.</p><p dir="ltr">In the second essay, I examine the causal effect of Global Value Chain (GVC) participation on export quality upgrading. Using the GMM methodology, I find consistent evidence that increasing GVC participation has a positive and statistically significant effect on export quality. An increase in domestic value-added embodied in foreign exports as a share of domestic gross exports (forward GVC participation) has a pronounced and robust effect on export quality upgrading. However, the effect of foreign value-added in an industry’s exports as a share of gross exports (backward GVC participation) is largely muted.</p><p dir="ltr">In the third essay, I examine the association between a country-industry’s position in GVCs and the global decline in labor shares. I hypothesize that the position within GVCs is closely related to the labor share of value-added: Country-industry pairs in relatively more upstream GVC positions are associated with lower labor shares of value-added. Using the OECD ICIO Tables for 76 economies from 1995 to 2020, I construct an upstreamness measure which quantifies a country-industry’s relative position in a linear production process. Results from panel data regressions suggest that consistent with my hypothesis, an increase in the GVC position one stage further from the final demand is associated with a statistically significant reduction of the labor share by nearly three percentage points. This effect is robust in the full sample, OECD countries subsample, and among the industrial sectors.</p>