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Distributive Profiles Associated with Domestic Versus International Specialization in Global Value Chains

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If primary commodities and mid-to-high-tech manufacturing products are produced by industries with different wage shares, there are distributive implications of deepening trade integration with certain regions with respect to others.

The present paper sets out trends in the functional income distribution implied by countries’ integration in Global Value Chains (GVCs), taking account also of interregional interactions (South-South and North-South). Through the application of an innovative input-output methodology, it quantifies inter-country differences in functional income distribution by means of a novel indicator to estimate the distributive profile associated with domestic vis-à-vis international specialization. The focus is on trade flows, and the analysis carried out allows us to single out the distributive implications of alternative regional integration projects, in view of a more inclusive multilateral trade system.