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Global Firms and Global Value Chains: Measurement and Mechanisms

Objective

The growing fragmentation of production across firms and countries has revolutionized international trade in recent decades. Firms today choose which production stages to conduct themselves and which to outsource to other parties, which to complete at home and which to offshore abroad. Known as global value chains (GVCs), this phenomenon creates new challenges and opportunities for individual firms and aggregate economies. Of primary policy interest are the implications of GVCs for growth, the transmission of shocks across firms and borders, and the design of economic policies. Yet academic research has faced two major challenges: poor measurement and poorly understood mechanisms.
I propose an ambitious research program that will use exceptional new data and novel GVC measures for path-breaking GVC analysis. First, I will exploit unique panel data on firm production, management practices, export and import transactions for the world’s two largest export economies, China and the US; and unique panel data on firm production, export and import transactions, and the network of domestic firm-to-firm transactions for one of the most open economies, Belgium. Second, I will develop measures that comprehensively characterize three dimensions of firms’ GVC activity: value added (total/domestic/foreign), production line position (upstreamness), and network position (centrality). Third, I will empirically and theoretically examine the impact of GVCs on firm growth, shock transmission, and export-finance policy through six synergistic projects. Each project will make a distinct contribution by investigating new economic mechanisms, establishing new empirical facts, and combining theory and data for informative welfare calculations.
The novelty of the data and the complex mechanisms driving GVCs make this research program highly ambitious. At the same time, the importance of understanding GVCs for economic policy and academic research make this agenda extraordinarily high-return.

Field of science

  • /social sciences/economics and business/business and management/commerce

Call for proposal

ERC-2016-COG
See other projects for this call

Funding Scheme

ERC-COG - Consolidator Grant

Host institution

UNIVERSITY COLLEGE LONDON
Address
Gower Street
WC1E 6BT London
United Kingdom
Activity type
Higher or Secondary Education Establishments
EU contribution
€ 1 462 304

Beneficiaries (2)

UNIVERSITY COLLEGE LONDON
United Kingdom
EU contribution
€ 1 462 304
Address
Gower Street
WC1E 6BT London
Activity type
Higher or Secondary Education Establishments
THE CHANCELLOR, MASTERS AND SCHOLARS OF THE UNIVERSITY OF OXFORD

Participation ended

United Kingdom
EU contribution
€ 0
Address
Wellington Square University Offices
OX1 2JD Oxford
Activity type
Higher or Secondary Education Establishments