# 1 On-line Appendix

## 1.1 Data for Cross-Country Analysis

Table A1 presents the detailed de...nitions and data sources for the variables used in the analysis. Summary statistics for the country level variables are provided in Table A2 while their correlations are shown in Tables A3 and A4.

The sectors in the EORA database are de...ned as follows. Agriculture includes ...shing; mining and quarrying is a separate sector; manufacturing includes food and beverages; textiles and wearing apparel; wood and paper; petroleum, chemicals and non-metallic minerals; metal products; electrical and machinery; transport equipment; and other manufacturing. Services covers recycling; electricity, gas and water; construction; maintenance and repair; wholesale trade; retail trade; hotels and restaurants; transport; post and telecommunications; ...nancial intermediation and business activities; public administration; and education, health and other services. We exclude from our analysis the following three sectors: private households; others; and re-exports and re-imports.

Regarding factor endowments, all variables are measured as a ratio to real GDP. Lowskilled labor endowments follow the ILO’s de...nition of low skill (skill level 1), based on the International Standard Classi...cation of Occupations. Likewise, medium/high-skilled labor refers to the ILO’s de...nition of medium and high skill (skill levels 2-4). We use the real capital stock from the Penn World Tables to measure capital endowments. Regarding natural resource endowments, we use the country’s land area as well as the rents from natural resources, both taken from the World Development Indicators (WDI).

We use the average manufacturing tari¤ rate from WDI and the level of FDI in‡ows from UNCTAD. Geography is captured by a country’s total distance (in kilometers) to the main global GVC hubs, China, Germany, and the US from CEPII. For domestic industrial capacity we use manufacturing value added from WDI. To measure a country’s institutional quality, we use the political stability index from the World Governance Indicators database. We also include a measure of exchange rate appreciation based on changes in the average nominal exchange rate from WDI.

To assess the role of PTAs, we include indicator variables for a country’s participation in PTAs: the North American Free Trade Agreement (NAFTA), the EU, ASEAN, and the Southern Common Market (MERCOSUR), the number of PTA partners and a measure of the depth of those PTAs, both taken from the Content of Deep Trade Agreements database of Hofmann et al. (2017).

To capture aspects related to connectivity, we add alternatively, the time to clear imports from the Doing Business Database, the Logistics Performance Index’overall score, the share of the population that uses the internet from WDI and the share of people that speak English as a second language from Melitz and Toubal (2014). We also include a measure of domestic credit as percent of GDP from WDI to capture a country’s ...nancial development and the share of females in the total labor force from WDI. As an alternative to exchange rate depreciation we use a measure of exchange rate misalignment relative to an equilibrium exchange rate following Couharde et al. (2017).

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