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GTAP Resources: Resource Display

GTAP Resource #7331

"Modelling FDI in GTAP: Supply Chains Reconfiguration"
by Chen, Shenjie, Peter Dixon, Maureen Rimmer and Jingliang Xiao

We start by reviewing three previous efforts at incorporating FDI in GTAP.
(1) Lakatos and Fukui (2014).
(2) Yuan and Tsigas (2022).
(3) Dixon and Rimmer (2022)

Contribution in this paper:

In model (3), the presence of Japanese affiliates in the U.S. market makes the elasticity of substitution high for U.S. consumers between U.S. produced cars and imports from Japan. However, the model (3) specification does not recognize that the presence of a major Chinese affiliate in Vietnam should generate a high elasticity of substitution by U.S. consumers between imports from Vietnam and imports from China.

Thus, model (3) does not introduce proper incentives for supply chain reconfigurations. For example, it doesn’t capture the idea that Chinese producers faced with U.S. tariffs can move their production from China to Vietnam. The present paper fixes this problem and provides illustrative applications.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Chen, S. (4/15/2024)
Updated: Chen, S. (4/15/2024)
Visits: 120
- New quantitative trade models
- Supply chains
- Advances in quantitative methods
- Dynamic modeling
- Model extension/development

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