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Tracing Value-Added and Double Counting in Gross Exports
TL;DR: The authors proposed a framework for gross exports accounting that breaks up a country's gross exports into various value-added components by source and additional double counted terms, identifying which parts of the official trade data are double counted and the sources of the double counting.
Abstract: This paper proposes a framework for gross exports accounting that breaks up a country's gross exports into various value-added components by source and additional double counted terms. By identifying which parts of the official trade data are double counted and the sources of the double counting, it bridges official trade (in gross value terms) and national accounts statistics (in value added terms). Our parsimonious framework integrates all previous measures of vertical specialization and value-added trade in the literature into a unified framework. To illustrate the potential of such a method, we present a number of applications including re-computing revealed comparative advantages and the magnifying impact of multi-stage production on trade costs.
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TL;DR: The World Input-Output Database (WIOD) as mentioned in this paper contains annual time-series of world input-output tables and factor requirements covering the period from 1995 to 2011, and illustrates its usefulness by analyzing the geographical and factorial distribution of value added in global automotive production.
Abstract: This article provides guidance to prudent use of the World Input–Output Database (WIOD) in analyses of international trade. The WIOD contains annual time-series of world input–output tables and factor requirements covering the period from 1995 to 2011. Underlying concepts, construction methods and data sources are introduced, pointing out particular strengths and weaknesses. We illustrate its usefulness by analyzing the geographical and factorial distribution of value added in global automotive production and show increasing fragmentation, both within and across regions. Possible improvements and extensions to the data are discussed.
1,910 citations
Cites background or methods or result from "Tracing Value-Added and Double Coun..."
...When we exclude the results from Koopman et al. (2014) the rank correlations across the other three set of results, based on 39 observations, range from 0.91 to 0.94....
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...…research into the formation of regional production clusters in the world economy (e.g. Baldwin and Lopez-Gonzales, 2013; Timmer et al., 2013; and Los et al., 2015), as well as analyzing the domestic value-added content of gross exports (e.g. Wang et al., 2013; Koopman et al., 2014; Johnson, 2014)....
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...…to compile their own databases, typically merging international trade statistics with a collection of input– output tables from the Global Trade Analysis Project (GTAP) project into a world input–output table (see e.g. Trefler and Zhu, 2010; Johnson and Noguera, 2012a,b; Koopman et al., 2014)....
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...The follow-up work by Johnson and Noguera (2012a) and Koopman et al. (2014) on measuring the domestic value content of exports relied heavily on the use of world input–output tables and increased demand for this type of data....
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...This statistic is available in the OECD TiVA database, as well as in the work of Johnson and Noguera (2012a) and Koopman et al. (2014)....
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TL;DR: In this article, the authors present a portrait of the global pattern of supply chain trade and how it has evolved since 1995, focusing on the most momentous global economic changes in the last 100 years.
Abstract: The trade associated with international production networks – supply-chain trade for short – is associated with some of the most momentous global economic changes in the last 100 years. It has transformative implications for the world economy. This paper presents a portrait of the global pattern of supply-chain trade and how it has evolved since 1995.
455 citations
TL;DR: In this paper, the authors derive the distribution of value added by all countries involved in the production chain of a particular final good, based on a new input-output model of the world economy, covering 40 countries and 14 manufacturing product groups.
Abstract: Denser networks of intermediate input flows between countries suggest ongoing international fragmentation of production chains. But is this process mainly taking place between countries within a region, or is it truly global? We provide new macroeconomic evidence by extending the Feenstra and Hanson (1999) measure of fragmentation to a multicountry setting. We derive the distribution of value added by all countries involved in the production chain of a particular final good. This is based on a new input–output model of the world economy, covering 40 countries and 14 manufacturing product groups. We find that in almost all product chains, the share of value added outside the country-of-completion has increased since 1995. This is mainly added outside the region to which the country-of-completion belongs, suggesting a transition from regional production systems to “Factory World.” This tendency was only briefly interrupted by the financial crisis in 2008.
373 citations
TL;DR: Wang et al. as discussed by the authors found that substitution of domestic for imported materials by individual processing exporters caused China's domestic content in exports to increase from 65 to 70 percent in 2000-2007.
Abstract: China has defied the declining trend in domestic content in exports in many countries. This paper studies China’s rising domestic content in exports using firm- and customs transaction-level data. The approach embraces firm heterogeneity and hence reduces aggregation bias. The study finds that the substitution of domestic for imported materials by individual processing exporters caused China’s domestic content in exports to increase from 65 to 70 percent in 2000–2007. Such substitution was induced by the country’s trade and investment liberalization, which deepened its engagement in global value chains and led to a greater variety of domestic materials becoming available at lower prices.
361 citations
TL;DR: In this article, the authors generalize the gross exports accounting framework at the country level to one that decomposes gross trade flows (for both exports and imports) at the sector, bilateral, or bilateral sector level.
Abstract: This paper generalizes the gross exports accounting framework at the country level, recently proposed by Koopman, Wang, and Wei (2014), to one that decomposes gross trade flows (for both exports and imports) at the sector, bilateral, or bilateral sector level. We overcome major technical challenges for such generalization by allocating bilateral intermediate trade flows into their final destination of absorption. We also point out two major shortcomings associated with the VAX ratio concept often used in the literature and ways to overcome them. We present the dis-aggregated decomposition results for bilateral sector level gross trade flows among 40 trading nations in 35 sectors from 1995 to 2011 based on the WIOD database.
335 citations
References
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3,593 citations
TL;DR: This paper found that vertical specialization accounts for 21% of these countries' exports, and grew almost 30% between 1970 and 1990, and also found that growth in vertical specialization accounted for 30% of the growth in these countries’ exports.
2,775 citations
TL;DR: In this paper, the authors combine input-output and bilateral trade data to quantify cross-border production linkages, and compute bilateral trade in value added for 87 countries and regions.
1,427 citations
Posted Content•
TL;DR: The World Input-Output Database (WIB) as mentioned in this paper was developed to analyse the effects of globalization on trade patterns, environmental pressures and socio-economic development across a wide set of countries.
Abstract: The World Input-Output Database has been developed to analyse the effects of globalization on trade patterns, environmental pressures and socio-economic development across a wide set of countries. The database covers 27 EU countries and 13 other major countries in the world for the period from 1995 to 2009. It is downloadable at http://www.wiod.org/database/index.htm. Length: 74 pages
669 citations
TL;DR: In this article, a new conceptual framework is presented to measure sources of value-added trade by country in global production networks, with a parsimonious decomposition of gross exports that eliminates double counting.
Abstract: This paper presents a new conceptual framework to measure sources of value-added trade by country in global production networks. With a parsimonious decomposition of gross exports that eliminates "double counting", it integrates all previous measures of vertical specialization and value-added trade in the literature. We apply the framework to the most recent appropriate data (2004). Among emerging markets, East Asian countries are the most globally integrated. Among major developed economies, the US is the most integrated in some aspects, and Japan in others. These regional differences also affect exporters’ trade costs.
658 citations