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Unveiling the true value of across-strait trade: The global value chain approach

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  • Liou, Ruey-Wan
  • Lin, Hsing-Chun
  • Chang, Ching-Cheng
  • Hsu, Shih-Hsun

Abstract

Due to the pervasive nature of value chains, an increasing amount of imported intermediate components and raw materials from other countries are entangled in Taiwan's exports to Mainland China. This circumstance leads to odd across-trait bilateral trade amounts and surpluses favorable towards Taiwan. The purposes of this paper are applying Johnson and Noguera (2012) to extricate value-added exports earned by Taiwan from China and Wang, Wei, and Zhu (2013) to decompose Taiwan's gross exports to China into various meaningful components. The two issues are related to trade in value added and value added in trade. Specifically, the former explores the value added embedded in the source country's exports to the absorbing country as final demand, regardless of whether those goods are directly or indirectly arriving at the absorbing country. The latter only looks where the value added is originated regardless of where it is ultimately absorbed. We show both concepts aim to measure a country's value added from its trades, but from different angles. Each has its own distinct meaning. They are related, but not completely the same.

Suggested Citation

  • Liou, Ruey-Wan & Lin, Hsing-Chun & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2016. "Unveiling the true value of across-strait trade: The global value chain approach," China Economic Review, Elsevier, vol. 41(C), pages 159-180.
    • Handle: RePEc:eee:chieco:v:41:y:2016:i:c:p:159-180
    DOI: 10.1016/j.chieco.2016.10.001
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    References listed on IDEAS

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    Cited by:

    1. Xing, Yuqing, 2020. "Global value chains and the “missing exports” of the United States," China Economic Review, Elsevier, vol. 61(C).
    2. Zhao, Yuhuan & Liu, Ya & Qiao, Xiaoyong & Wang, Song & Zhang, Zhonghua & Zhang, Yongfeng & Li, Hao, 2018. "Tracing value added in gross exports of China: Comparison with the USA, Japan, Korea, and India based on generalized LMDI," China Economic Review, Elsevier, vol. 49(C), pages 24-44.

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    Keywords

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    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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