Econometrica,Vol.88,No.4(July,),–

ONTHEGEOGRAPHYOFGLOBALVALUECHAINS

POLANTRàS

DepartmentofEconomics,HarvardUniversityandNBER

ALONSODEGORTARI

Thispaperdevelopsamulti-stagegeneral-equilibriummodelofglobalvaluechains(GVCs)andstudiesthespecializationofcountrieswithinGVCsinaworldwithbarrierstointernationaltrade.Withcostlytrade,theoptimallocationofproductionofagivenstageinaGVCisnotonlyafunctionofthemarginalcostatwhichthatstagecanbeproducedinagivencountry,butisalsoshapedbytheproximityofthatlocationtotheprecedentandthesubsequentdesiredlocationsofproduction.Weshowthat,otherthingsequal,itisoptimaltolocaterelativelydownstreamstagesofproductioninrelativelycentrallocations.Wealsodevelopandestimateatractable,quantifiableversionofourmodelthatillustrateshowchangesintradecostsaffecttheextenttowhichvariouscountriesparticipateindomestic,regional,orglobalvaluechains,andtracestherealin