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Measuring domestic factor content in bilateral or sectoral-level trade flows

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  • Wang, Zhi
  • Wei, Shang-Jin
  • Zhu, Kunfu

Abstract

Measuring country origins of factor content in bilateral or sector-level exports is important for understanding the evolution of regional and global value chains and the roles of individual country-sectors in these chains. This paper proposes a method to distinguish between measures based on backward and forward linkages and between net and gross factor content. The framework is consistent with the System of National Account Standard and satisfies the adding-up property. In comparison, these properties do not hold for the factor content measure proposed by Los et al. (2016). A number of examples involving disaggregated trade are presented to show when the two methods diverge.

Suggested Citation

  • Wang, Zhi & Wei, Shang-Jin & Zhu, Kunfu, 2025. "Measuring domestic factor content in bilateral or sectoral-level trade flows," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 122-130.
    • Handle: RePEc:eee:streco:v:75:y:2025:i:c:p:122-130
    DOI: 10.1016/j.strueco.2025.04.012
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    References listed on IDEAS

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    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
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    5. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    6. Bart Los & Marcel P. Timmer, 2020. "Measuring Bilateral Exports of Value Added: A Unified Framework," NBER Chapters, in: Challenges of Globalization in the Measurement of National Accounts, pages 389-421, National Bureau of Economic Research, Inc.
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