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Comparative Advantage of Value-Added Services: The Case of South Africa

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  • Sonja Grater

    (North-West University, South Africa)

Abstract

Global supply chains have changed the way in which products are produced internationally. The inputs into a final product include both intermediate goods and services, which adds value to the final product. Gross trade data is misleading and includes some double counting. This study questions whether traditional revealed comparative advantage (RCA) calculations for gross exports of services would offer different results from value-added services. RCA calculation was done for South Africa and the bric countries for both gross exports and value added services. The analysis showed that some countries performed stronger in terms of gross exports than in value added terms for some sectors, but others showed higher comparative advantage in value added terms. For South Africa, most services had a higher comparative advantage in terms of value added than for gross exports. The results indicated the importance of including value added data in international trade data analysis.

Suggested Citation

  • Sonja Grater, 2014. "Comparative Advantage of Value-Added Services: The Case of South Africa," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(3 (Fall)), pages 279-295.
    • Handle: RePEc:mgt:youmgt:v:12:y:2014:i:3:p:279-295
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    File URL: http://www.fm-kp.si/zalozba/ISSN/1581-6311/12_279-295.pdf
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    References listed on IDEAS

    as
    1. Ronald W. Jones, 2000. "A Framework for Fragmentation," Tinbergen Institute Discussion Papers 00-056/2, Tinbergen Institute.
    2. Robert C. Johnson, 2014. "Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 119-142, Spring.
    3. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Aleksandra Kordalska & Magdalena Olczyk, 2018. "CEE Trade in Services: Value-Added Versus Gross Terms Approaches," Eastern European Economics, Taylor & Francis Journals, vol. 56(4), pages 269-291, July.

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    More about this item

    Keywords

    services trade; comparative advantage; value added; South Africa; BRIC;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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