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Trade Integration, Global Value Chains, and Capital Accumulation

January 14, 2021

Kuala Lumpur Research Seminar Series

  • Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. The presence of GVC trade boosts capital accumulation and economic growth and magnifies dynamic gains from trade. At the same time, endogenous capital accumulation shapes comparative advantage across countries, impacting the dynamics of GVC trade: a country becoming more capital abundant concentrates more on the capital-intensive stage of the production.

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  • Kei-Mu Yi is the M.D. Anderson Professor of Economics at the University of Houston.  He is also a Research Associate with the International Trade and Investment, and International Finance and Macroeconomics programs at the NBER. In the past, he held positions with the Federal Reserve Banks of New York, Philadelphia, Minneapolis, and Dallas. His research has been published in the American Economic Review, Journal of Political Economy, American Economic Journal – Macroeconomics, Journal of Monetary Economics, and Journal of International Economics.  His current research is on firm and industry-level structural change in an open economy, and the implications of global value chains for international trade, growth, and inequality. He received a Ph.D. in economics from the University of Chicago.


  • WHEN (KUALA LUMPUR TIME): Thursday, January 14, 2020: 9:00 - 10:00am
  • WHEN (ET/WASHINGTON, D.C. TIME): Wednesday, January 13, 2020: 8:00 – 9:00pm
  • WATCH: Watch Recording