The Effect of Non-Tariff Measures on Global Value Chain Participation

Abstract

ABSTRACT This study takes a novel approach by using an additional compliance requirement indicator as a relative proxy for non-tariff measures (NTMs) to measure the impact of NTMs on global value chain (GVC) participation. We conduct a cross-sectional analysis at the industry level, spanning 30 countries with 19 industrial sectors in the year 2015. Our analysis finds that both NTMs and tariffs have negative impacts on backward GVC participation, and the impact of NTMs is greater than that of tariff measures. Therefore, policies that reduce trade costs from policy barriers, especially NTMs, can help promote participation in GVCs.