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Vertical specialization across the world: a relative measure

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Author Info
Amador, João
Cabral, Sónia

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Abstract

This paper investigates a specific aspect of international production linkages that, following Hummels et al. (2001), is commonly designated as vertical specialization (VS) - the use of imported inputs to produce goods that are afterwards exported. We propose a relative measure of VS-based trade that combines information from Input-Output matrices and international trade data, producing results for a large sample of individual countries and geographical areas with a detailed product breakdown over the 1967-2005 period. This measure identifies a country’s trade flow as associated with VS activities when the share of exports of a good relatively to the world average is above a given threshold and it is accompanied by a relative share of imports of a related intermediate product that is also above the threshold. The quantification of VS-based trade for each country/product pair in each period is made in a relative and conservative manner, since it includes only the value of intermediate imports that surpasses what is implied by the chosen international threshold. The detailed results can be subsequently added up to get any product or geographical breakdown desired. We illustrate this measure by showing the evolution of VS activities at the world level over the last four decades using a product breakdown by technological intensity and a geographical breakdown by main areas. The results point to a substantial increase of VS in high-technology products over the last two decades. There is also empirical evidence on the sharp increase of VS activities in East Asia.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9618.

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Date of creation: 18 Jul 2008
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Handle: RePEc:pra:mprapa:9618

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Related research
Keywords: International Trade International Fragmentation of Production Vertical Specialization Globalization

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
F1 - International Economics - - Trade

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany. [Downloadable!]
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