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Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera, Accounting for Intermediates: Production Sharing and Trade in Value Added

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  • Kuboniwa, Masaaki
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    Abstract

    In light of growing intermediate goods trade, Johnson and Noguera (2012) developed theoretical and empirical research on the new concept of trade in value added in place of gross trade. However, they did not deal with the relationship between the new value added trade balance and the gross trade balance. Presented here is that in the case of two countries and many sectors the new value added trade balance always equals the gross trade balance. We verify this proposition by using an international input-output data compiled by Groningen University. In the case with three countries (China, the USA and the rest of the world; ROW) and many sectors, the China-USA trade balance or the USA-China imbalance measured in value added for 2010 is 23.5% smaller than that in gross terms, whereas the China-ROW trade balance in value added is 94% larger than that in gross terms.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/26056/1/DP598.pdf
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    Bibliographic Info

    Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number 598.

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    Length: 18 p.
    Date of creation: Jan 2014
    Date of revision:
    Handle: RePEc:hit:hituec:598

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    Keywords: trade in value added; gross trade; input-output tables; global supply chain;

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    1. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    2. Daniel Trefler & Susan Chun Zhu, 2005. "The Structure of Factor Content Predictions," NBER Working Papers 11221, National Bureau of Economic Research, Inc.
    3. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2011. "Give Credit where Credit is Due: Tracing Value Added in Global Production Chains," Working Papers 312011, Hong Kong Institute for Monetary Research.
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