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Made in the world?

Author

Listed:
  • Sébastien Miroudot
  • Håkan Nordström

Abstract

In the past five years, the concept of “global value chain” (GVC) has become popular to describe the way firms fragment production into different stages located in different economies. The “made in the world” narrative suggests that production today is global with inputs coming from all parts of the world before being assembled into final products also shipped all over the world. The empirical basis of this story has however been questioned, suggesting that supply chains are regional rather than global. In this paper we offer a comprehensive review of the evidence based on the World Input-Output Database (WIOD), including new indicators counting the number of domestic and foreign production stages, border crossings and geographic length of the supply chains. The study covers 1995 to 2011. All evidence points in the same direction. The made in the world narrative is correct as far as the direction is concerned, but we still have a long way to go. On average, globalization proceeds at 40 kilometres a year.

Suggested Citation

  • Sébastien Miroudot & Håkan Nordström, 2015. "Made in the world?," RSCAS Working Papers 2015/60, European University Institute.
    • Handle: RePEc:rsc:rsceui:2015/60
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    References listed on IDEAS

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    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    3. Pol Antras & Davin Chor & Thibault Fally & Russell Hillberry, 2012. "Measuring the Upstreamness of Production and Trade Flows," American Economic Review, American Economic Association, vol. 102(3), pages 412-416, May.
    4. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    5. Erik Dietzenbacher & Bart Los & Robert Stehrer & Marcel Timmer & Gaaitzen de Vries, 2013. "The Construction Of World Input-Output Tables In The Wiod Project," Economic Systems Research, Taylor & Francis Journals, vol. 25(1), pages 71-98, March.
    6. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    7. Bart Los & Marcel P. Timmer & Gaaitzen J. Vries, 2015. "How Global Are Global Value Chains? A New Approach To Measure International Fragmentation," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 66-92, January.
    8. Erik Dietzenbacher & Isidoro Romero, 2007. "Production Chains in an Interregional Framework: Identification by Means of Average Propagation Lengths," International Regional Science Review, , vol. 30(4), pages 362-383, October.
    9. 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.
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    Citations

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    Cited by:

    1. Reshef, Ariell & Santoni, Gianluca, 2023. "Are your labor shares set in Beijing? The view through the lens of global value chains," European Economic Review, Elsevier, vol. 155(C).
    2. Tsekeris, Theodore, 2017. "Global value chains: Building blocks and network dynamics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 488(C), pages 187-204.
    3. Christian Volpe Martincus, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 96856, February.
    4. Carballo, Jerónimo & Schaur, Georg & Volpe Martincus, Christian, 2016. "Trust No One?: Security and International Trade," IDB Publications (Working Papers) 7684, Inter-American Development Bank.
    5. Reshef, Ariell & Santoni, Gianluca, 2023. "Are your labor shares set in Beijing? The view through the lens of global value chains," European Economic Review, Elsevier, vol. 155(C).
    6. Volpe Martincus, Christian, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 7994.
    7. Jerónimo Carballo & Georg Schaur & Christian Volpe Martincus, 2016. "Trust No One?: Security and International Trade," IDB Publications (Working Papers) 94636, Inter-American Development Bank.
    8. Hakan Nordström & Harry Flam, 2018. "Production Integration in the European Union," CESifo Working Paper Series 6944, CESifo.

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    More about this item

    Keywords

    Fragmentation of production; vertical specialization; global value chain;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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