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Vertical Linkages and the Collapse of Global Trade

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Author Info

  • Rudolfs Bems
  • Robert C. Johnson
  • Kei-Mu Yi

Abstract

A common view is that cross-border vertical linkages played a key role in the 2008-2009 collapse of global trade. This paper presents two accounting results from a global input-output framework that shed light on this channel. We feed in observed changes in final demand and find that trade in final goods fell by twice as much as trade in intermediate goods. Nevertheless, intermediate goods account for more than two-fifths of the trade collapse. We also find that vertical specialization trade fell 13 percent, while value-added trade fell by 10 percent, because declines in demand were largest in highly vertically-specialized sectors.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.308
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 3 (May)
Pages: 308-12

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:308-12

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  1. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports 96, Federal Reserve Bank of New York.
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Cited by:
  1. Timmer, Marcel P. & Los, Bart & Stehrer, Robert & de Vries, Gaaitzen, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness," Working Paper Series 1615, European Central Bank.
  2. Ran Jing, 2011. "The Collapse Speed of China's Exports in the 2008-2009 Financial Crisis," CESifo Working Paper Series 3584, CESifo Group Munich.
  3. Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2012. "The Great Trade Collapse," NBER Working Papers 18632, National Bureau of Economic Research, Inc.
  4. Antonakakis, Nikolaos, 2012. "The great synchronization of international trade collapse," MPRA Paper 39859, University Library of Munich, Germany.
  5. Alyson C. Ma & Ari Van Assche, 2012. "Is East Asia’s Economic Fate Chained to the West?," CIRANO Working Papers 2012s-11, CIRANO.
  6. Tamim Bayoumi & Francis Vitek, 2013. "Macroeconomic Model Spillovers and Their Discontents," IMF Working Papers 13/4, International Monetary Fund.
  7. Robert Stehrer & Roman Stöllinger, 2013. "Positioning Austria in the Global Economy: Value Added Trade, International Production Sharing and Global Linkages," FIW Research Reports series V-002, FIW.
  8. Robert Stehrer, 2013. "Accounting Relations in Bilateral Value Added Trade," wiiw Working Papers 101, The Vienna Institute for International Economic Studies, wiiw.
  9. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
  10. Foster-McGregor, Neil & Stehrer, Robert, 2013. "Value added content of trade: A comprehensive approach," Economics Letters, Elsevier, vol. 120(2), pages 354-357.
  11. Rahel Aichele & Gabriel Felbermayr & Inga Heiland, 2013. "Der Wertschöpfungsgehalt des Außenhandels: Neue Daten, neue Perspektiven," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(05), pages 29-41, 03.

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