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Double Counting in Mystery: Journey of Intermediate Products in Multi-Country Trade

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  • Biyik, Onur

Abstract

This study analyzes the production concept of the Value-Added (VA) chain by implying an alternative framework, as this concept is the main driver of the VA embodied in the intermediate export. VA supply chain spillover (upstream and downstream) of the production activities is investigated. The focal point of this study is to extend Global Value Chains (GVC) based on disaggregated interconnections in relation to the multilevel and bilateral trade flow of the VA spillover. In brief, there are two main contributions of this paper; the first begins with the originality of this work’s theory which reveals the intermediate input journey among sector-country pairs as completed GVC participation, and the second is to introduce the coefficients of the technological spillover effect as well as upstream and downstream effects. In other words, this paper found that different forms of the VA with traveled products multiplier provide more precise (sectoral/regional) integration and optimal estimation method. This paper relies on constructed Global Trade Analysis Project Multi-Region Input-Output (GTAP-MRIO) and patent panel datasets. As a result of the analysis, if the product crosses the border only twice as the product returns home to its origin country, the export/import coefficient of the sectoral linkages, which boosts VA and then causes double-counting, is about 1.54 % in terms of (single) country-level data. With regard to its contributions with the technological spillover effect, traveling intermediate product as twice or infinity is to contribute by 1.6% or 154%. Lastly, its contribution to VA presents 0.8% to 72%.

Suggested Citation

  • Biyik, Onur, 2022. "Double Counting in Mystery: Journey of Intermediate Products in Multi-Country Trade," Conference papers 333417, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333417
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    File URL: https://ageconsearch.umn.edu/record/333417/files/11503.pdf
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