Does the Global Value Chain Worsen the Terms of Trade?—The Perspective of Developing Countries
- ZHANG Shaojun & HOU Huifang
- Xiamen University, 361005.
The improvement of the terms of trade of developing countries in the Global Value Chain (GVC) affects not only the domestic gains from trade, but also the prospect of domestic industrial upgrading. Therefore, based on the World Input-Output Database, this paper uses the cross-country panel data of developing countries from 1995 to 2014 to explore the mechanism of GVC's influence on the terms of trade of developing countries. We found that: Firstly, As the degree of GVC embeddedness rises, the terms of trade of developing countries will continue to deteriorate. Secondly, judging from the export and import channels respectively, the GVC has lowered the export price index and increased the import price index of developing countries, leading to the “high-price-in and low-price-out” model of the terms of trade. Thirdly, comparative analysis of the two channels reveals the GVC is more likely to worsen the terms of trade of developing countries through the export channel. Finally, the effect of GVC embedding on the terms of trade will be affected by the GVC position indices. As the degree of GVC embeddedness increases, the developing countries that are in the downstream position of GVC obtain less trade benefit, which is reflected in the gradual deterioration of the terms of trade.
JEL：F14, F15, F41
- Global Value Chain, Terms of Trade, Immiserizing Growth, Transfer Price