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GTAP Events: Center Seminar Series

"Value Chains in Global Production Networks: An Application of Global Input-Output Tables"
by William Powers

The increasing segmentation of production into different stages in different countries poses challenges to the measurement of the sources of value added in international trade. In this paper, we extend recent quantitative measures of vertical specialization, including both direct trade and indirect exports that pass through other countries. Our framework distributes all value-added in a country’s exports to its original sources, and it expresses individual sources and destinations of value added at either the country-wide or industry level. Despite the breadth of the framework, it is also quite parsimonious, expressing all global value-added flows as the product of only three matrices. This paper also provides new detail on intermediate products, decomposing value-added in intermediate exports into the shares that are (1) consumed in the country where they receive final assembly, i.e., are sent to a “consuming country” or a “consumer”; and (2) finished in one country but consumed in another, i.e., are sent to a “packaging country” or a “packager.” Our results show that much of Asia, including China itself, sends their exports to countries that provide final assembly on behalf of consumers in other countries. Asian countries also have relatively dispersed sourcing of imported intermediate inputs. In contrast, developed countries, which lie further downstream in global supply chains, more commonly send their intermediates directly to the country of final consumption, and have much more concentrated sourcing networks. This paper also decomposes value added trade by broad sector, and may surprise those who associate manufacturing activity with high value added. Natural resource exporters (e.g., Russia) have some of the highest value-added shares in their overall exports. Conversely, countries that specialize in manufacturing, such as Korea and Mexico, have quite low value-added shares in their overall exports.

Date/Time: 10/15/2010   01:30 PM - 03:00 PM
Location: KRAN 661