The Network Origins of the Gains from Trade

Global supply chains are a defining feature of the modern world economy. This paper argues that their emergence has had important implications for our understanding of the origins of the welfare gains from trade.

In particular, we show that these gains are no longer primarily determined by a country’s own access to the technologies and markets of its direct trade partners (its own geography and technology). Instead, they crucially depend on a country’s precise position in the global production network, that can be captured by a set of simple statistics closely linked to concepts from network theory.

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