Prof. Pol Antras

Global Value Chains

Pol Antràs’ work in progress is entitled “An Austrian Model of Global Value Chains”. In this project, he develops a stylized model of multi-stage production in which the time length of each stage is endogenously determined. Letting the production process mature for a longer period of time increases labor productivity, but it comes at the cost of higher working capital needs for firms. In the absence of international trade, countries with lower interest rates feature longer production processes, higher labor productivity, and higher wages.

In a world with free trade, Mr. Antràs shows that countries with lower interest rates specialize in relatively 'time intensive' stages in global value chains (GVCs). Yet, if free trade brings about interest rate equalization, wages are also equalized and the pattern of trade is instead shaped by capital intensity and capital abundance, regardless of the time intensity of the various stages. Reductions in trade costs lead to patterns of specialization associated with higher amounts of vertical specialization in world trade. A worldwide decline in interest rates similarly fosters an increase in the share of GVC trade in world trade.

Pol Antràs will present his work at a joint meeting of the Munich International Economics Seminar and the LMU OrgEcon Lunch Seminar. During his visit, he also intends on pursuing an empirical project focused on estimation the production lengths of various manufacturing processes, with the ultimate goal of developing empirical tests of his “Austrian” theory of global value chains.
Pol Antràs is Robert G. Ory Professor of Economics at Harvard University, where he has taught since 2003. A citizen of Spain, he received his BA and MSc in Economics from Universitat Pompeu Fabra in Barcelona, and his PhD in Economics from the Massachusetts Institute of Technology. Mr. Antràs is a Research Associate at the National Bureau of Economic Research (NBER), where he served as Director of the International Trade and Organization (ITO) Working Group. He is also a CEPR Research Affiliate and is a Research Fellow of CESifo’s Research Network. He is a member of the Scientific Council of the Barcelona School of Economics.