Global Value Chain and the Patterns of Trade

How do countries specialize along global value chains (GVCs)? Models of Costinot et al. (2013) and Antràs and de Gortari (2020) predict more productive and centrally located countries specialize in more downstream stages where the costs of production errors and shipping are higher. I empirically examine these predictions by looking at the 20122019 trade data within three sectors, electronics, vehicles, and apparel. While the raw correlations of specialization vary across sectors, controlling for factor endowments and institutional strengths reveals a consistent pattern across the sectors. In all three sectors, more developed countries specialize in upstream products, contrary to the theory, while more central countries specialize in downstream products, consistent with the theory. The assembly of final products does not explain why development is negatively associated with downstream specialization