Handbook on Global Value Chains
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Handbook on Global Value Chains

Edited by Stefano Ponte, Gary Gereffi and Gale Raj-Reichert

Global value chains (GVCs) are a key feature of the global economy in the 21st century. They show how international investment and trade create cross-border production networks that link countries, firms and workers around the globe. This Handbook describes how GVCs arise and vary across industries and countries, and how they have evolved over time in response to economic and political forces. With chapters written by leading interdisciplinary scholars, the Handbook unpacks the key concepts of GVC governance and upgrading, and explores policy implications for advanced and developing economies alike.
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Chapter 5: Modeling global value chains: approaches and insights from economics

Davin Chor

Abstract

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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