We revisit the relationship between trade and growth taking into account the recent expansion of global value chains (GVCs). We develop a new instrument for trade based on gravity estimations. Our instrument exploits a recent transportation shock: the sharp increase in the maximum size of...

In a recent model Markusen and Venables (1999) describe the conditions under which foreign direct investments (FDI) can act as a catalyst for local industrial development. We apply this framework to the case of Poland, allowing for the entry of multinationals in both intermediates and...