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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.

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  • Bems, Rudolfs & Kikkawa, Ayumu Ken, 2020. "Measuring Trade in Value Added with Firm-Level Data," CEPR Discussion Papers 14281, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14281
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    Cited by:

    1. Jean Imbs & Laurent L. Pauwels, 2020. "High Order Openness," Working Papers 20200047, New York University Abu Dhabi, Department of Social Science, revised Jun 2020.
    2. Laurie S. M. Reijnders & Marcel P. Timmer & Xianjia Ye, 2021. "Labour demand in global value chains: Is there a bias against unskilled work?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2547-2571, September.
    3. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2021. "Supply Chain Fragmentation and the Global Trade Elasticity: A New Accounting Framework," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(4), pages 656-680, December.
    4. Nobuaki Yamashita & Doan Thi Thanh Ha, 2022. "Participation in Global Value Chains and Rent Sharing by Small Firms in Viet Nam," Working Papers DP-2021-52, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    Global value chains; Input-output tables; Aggregation bias;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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