The data sets for both the GTAP model and the GVC model have essentially the
same regions and sectors. Both data sets focus on the United States and China as
well as their top trade partners. Table 4.1 shows the 26 regions and 41 production
sectors in each region that are specified to represent the world economy. The first
difference between the GTAP and the GVC model is that in the GVC model China
and Mexico have export processing zones and these zones are modelled as separate
economies. Thus the total number of economies in the GVC model is 28. Figure 4.1
illustrates the GVC model linkages between the processing trade economy in China,
the rest of China and a third economy, Japan. Figure 4.1 shows that there is two-way
trade between Japan and the two Chinese economies; Japanese products enter the
Chinese processing zone duty free; the rest of the Chinese economy exports products
to its processing zone but does not import any products from it; finally, it is assumed
that labour and capital can move freely between the Chinese export processing zone
and the rest of the economy in China. The same linkages apply to Mexico and its
processing zone in the GVC model. In the standard GTAP model trade is only specified