• ISSN: 2301-3567 (Print)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly (2013-2014); Monthly (2015-2017); Quarterly (Since 2018)
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms. Mia Hu
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JOEBM 2021 Vol.9(1): 1-8 ISSN: 2301-3567
DOI: 10.18178/joebm.2021.9.1.646

Non-tariff Measures and the Global Value Chain Participation

Kunhyui Kim
Abstract—Trade barriers remain high despite the large reductions in tariffs. Recent literature focuses on technical regulations such as Non-tariff measures (NTMs) to explain the additional burdens for exporters. We construct the Bilateral Regulatory Distance (BIRD) to measure the different patterns of NTMs between the exporting and importing countries to examine the impact of NTMs on the backward and forward participation in global value chains (GVCs). To control for zero-value observations and heteroskedasticity, we employ Poisson pseudo maximum likelihood (PPML) estimation. The regression results indicate that overall, the disharmony of NTMs hamper backward participation in GVCs, whereas it positively affects forward participation in GVCs, regardless of the sectors. Both exporters and importers have fewer incentives to export or import intermediate goods at the prices resulting from the higher fixed costs derived by additional NTMs. On the other hand, firms export more domestic goods as inputs of the downstream process to compensate for the additional fixed costs imposed by the foreign market. Moreover, NTMs may induce more domestic value-added goods production and exports, as they can reduce transaction costs when appropriately harmonized over the long-term. Therefore, harmonization of NTMs is suggested, rather than the mere eradication of NTMs. As NTMs serve as a tool to ensure the safety of consumers and contribute to the larger flow of forward participation in GVCs, governments need to focus on the harmonization of NTMs via international standards.

Index Terms—Bilateral regulatory distance, global value chains, non-tariff measures, Poisson pseudo maximum likelihood.

Kunhyui Kim is with the Graduate School of Asia Pacific Studies, Waseda University, Japan (e-mail: twista0628@toki.waseda.jp).

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Cite:Kunhyui Kim, "Non-tariff Measures and the Global Value Chain Participation," Journal of Economics, Business and Management vol. 9, no. 1, pp. 1-8, 2021.

Copyright © 2021 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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