Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions

This paper attempts to quantify the impact of economic policy uncertainty on overall trade and trade linked to global value chains. Using new data on policy uncertainty for 18 countries and 24 years, it finds a statistically significant negative im...

Full description

Bibliographic Details
Main Authors:	Constantinescu, Cristina, Mattoo, Aaditya, Ruta, Michele
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	ECONOMIC POLICY TRADE TRADE GROWTH GLOBAL VALUE CHAIN POLICY UNCERTAINTY INVESTMENT CLIMATE
Online Access:	http://documents.worldbank.org/curated/en/507501572005904904/Policy-Uncertainty-Trade-and-Global-Value-Chains-Some-Facts-Many-Questions http://hdl.handle.net/10986/32657

id	okr-10986-32657
recordtype	oai_dc
spelling	okr-10986-326572022-09-20T00:14:12Z Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions Constantinescu, Cristina Mattoo, Aaditya Ruta, Michele ECONOMIC POLICY TRADE TRADE GROWTH GLOBAL VALUE CHAIN POLICY UNCERTAINTY INVESTMENT CLIMATE This paper attempts to quantify the impact of economic policy uncertainty on overall trade and trade linked to global value chains. Using new data on policy uncertainty for 18 countries and 24 years, it finds a statistically significant negative impact of policy uncertainty on overall trade growth. A 1 percent increase in uncertainty is associated with a 0.02 percentage point reduction in the growth of goods and services trade, implying that the increase in policy uncertainty since mid-2018 may have caused a 1 percentage point decline in world trade growth. The paper also finds that the impact of policy uncertainty on trade linked to global value chains is similar to overall trade. This is likely to be the result of two opposing forces: global value chains are more dependent on relation-specific investments that are sensitive to policy uncertainty, but these investments also make trade patterns sticky. More research and better data are needed to disentangle these different effects empirically. 2019-11-21T16:48:55Z 2019-11-21T16:48:55Z 2019-10 Working Paper http://documents.worldbank.org/curated/en/507501572005904904/Policy-Uncertainty-Trade-and-Global-Value-Chains-Some-Facts-Many-Questions http://hdl.handle.net/10986/32657 English Policy Research Working Paper;No. 9048 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC POLICY TRADE TRADE GROWTH GLOBAL VALUE CHAIN POLICY UNCERTAINTY INVESTMENT CLIMATE
spellingShingle	ECONOMIC POLICY TRADE TRADE GROWTH GLOBAL VALUE CHAIN POLICY UNCERTAINTY INVESTMENT CLIMATE Constantinescu, Cristina Mattoo, Aaditya Ruta, Michele Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
relation	Policy Research Working Paper;No. 9048
description	This paper attempts to quantify the impact of economic policy uncertainty on overall trade and trade linked to global value chains. Using new data on policy uncertainty for 18 countries and 24 years, it finds a statistically significant negative impact of policy uncertainty on overall trade growth. A 1 percent increase in uncertainty is associated with a 0.02 percentage point reduction in the growth of goods and services trade, implying that the increase in policy uncertainty since mid-2018 may have caused a 1 percentage point decline in world trade growth. The paper also finds that the impact of policy uncertainty on trade linked to global value chains is similar to overall trade. This is likely to be the result of two opposing forces: global value chains are more dependent on relation-specific investments that are sensitive to policy uncertainty, but these investments also make trade patterns sticky. More research and better data are needed to disentangle these different effects empirically.
format	Working Paper
author	Constantinescu, Cristina Mattoo, Aaditya Ruta, Michele
author_facet	Constantinescu, Cristina Mattoo, Aaditya Ruta, Michele
author_sort	Constantinescu, Cristina
title	Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
title_short	Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
title_full	Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
title_fullStr	Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
title_full_unstemmed	Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions
title_sort	policy uncertainty, trade, and global value chains : some facts, many questions
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/507501572005904904/Policy-Uncertainty-Trade-and-Global-Value-Chains-Some-Facts-Many-Questions http://hdl.handle.net/10986/32657
_version_	1764477008513859584

Policy Uncertainty, Trade, and Global Value Chains : Some Facts, Many Questions

Similar Items