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Measuring trade in value added with firm-level data

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  • Bems, Rudolfs
  • Kikkawa, Ayumu Ken

Abstract

Global Value Chains have proliferated in economic policy debates. Yet a key concept—trade in value added—is likely mismeasured because of sectoral aggregation bias stemming from reliance on input-output tables. This paper uses comprehensive firm-level data on domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added. The magnitude of the bias varies across countries—at 2–5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firms' import and export intensities and size determine the magnitude of the bias.

Suggested Citation

  • Bems, Rudolfs & Kikkawa, Ayumu Ken, 2021. "Measuring trade in value added with firm-level data," Journal of International Economics, Elsevier, vol. 129(C).
    • Handle: RePEc:eee:inecon:v:129:y:2021:i:c:s0022199621000118
    DOI: 10.1016/j.jinteco.2021.103434
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    2. A. Giunta & P. Montalbano & S. Nenci, 2022. "Consistency of micro- and macro-level data on global value chains: Evidence from selected European countries," International Economics, CEPII research center, issue 171, pages 130-142.
    3. Biswajit Banerjee & Juraj Zeman, 2022. "Determinants of global value chain participation: cross-country analysis," Indian Economic Review, Springer, vol. 57(1), pages 59-95, June.
    4. Xinheng Liu & Ziyuan Pan & Dongli Fang, 2023. "Agglomeration, resource reallocation and domestic value‐added ratio in exports," Growth and Change, Wiley Blackwell, vol. 54(1), pages 182-213, March.
    5. Antrà s, Pol & Chor, Davin, 2021. "Global Value Chains," CEPR Discussion Papers 15908, C.E.P.R. Discussion Papers.

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