Low-income countries can benefit from participating in global value chains, or GVCs, which account for the majority of world trade
Through cooperation with high-income economies, GVCs can provide local workers with better wages
Deep trade agreements and bilateral investment treaties can stimulate this international economic cooperation
In a new study, these policies are compared to help policy makers select the optimal tool for implementing GVCs
Deep trade agreements regulate border measures and domestic policies
while bilateral investment treaties protect investments in developing economies
Both tools help forge backward linkages within GVCs
But countries hoping to increase forward linkages and diversify must seek deep trade agreements
The findings highlight that pro-trade and anti-trade stances can impact countries’ integration into GVCs
Coordinating these production chains requires a nexus of trade, investment, and intellectual property
Further research is needed to understand the implications within economic sectors
Boffa et al. “Do we need deeper trade agreements for GVCS or just a BIT?” The World Economy (2018).