Vertical Trade

Abstract: This thesis consists of three separate papers. They are all empirical papers that examine how fragmentation of production processes and global value chains have affected international trade patterns. The first paper focuses on how private standards in the increasingly geographically fragmented food sector affect firm-import behaviour. By providing a quality insurance for the imported good, certification to standards may reduce both the fixed and variable costs of importing, which could have a positive effect on firm imports. This paper analyses how certification to the GlobalGAP private standard affect imports of fresh fruits and vegetables. No robust relationship is found between GlobalGAP certification and import behaviour at the level of the firm. The second paper takes global value chains into account by examining whether better access to intermediate inputs affects exports of final goods. More specifically, it empirically tests if expanding the set of available input suppliers through preferential rules of origin liberalisation affects export performance. It is found that access to more suppliers has a positive effect on both export intensity and export diversification. The third paper examines the stability of OECD offshoring flows. The study provides both a descriptive analysis and identifies factors that influence offshoring duration. It is found that offshoring flows have a mean duration of 3 years, but median duration is merely 1 year. Several determinants of offshoring duration are identified. For example, the capital intensity of the offshored product and the level of intellectual property rights protection in the exporting country affect how long a certain input is traded.