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International Value-Added Linkages in Development Accounting

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  • Alejandro Cuñat
  • Robert Zymek

Abstract

We generalise the traditional development-accounting framework to an open-economy setting. In addition to factor endowments and productivity, relative factor costs emerge as a source of real-income variation across countries. These are shaped by bilateral trade determinants (which underpin the patterns of “international value-added linkages”) and the global distribution of factor endowments and final expenditures. We use information on endowments, trade balances and value-added trade to back out the relative factor costs of 40 major economies in a theory-consistent manner. This reduces the variation in “residual” productivity required to explain the observed per-capita income differences by more than one half.

Suggested Citation

  • Alejandro Cuñat & Robert Zymek, 2018. "International Value-Added Linkages in Development Accounting," CESifo Working Paper Series 7196, CESifo.
  • Handle: RePEc:ces:ceswps:_7196
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    Cited by:

    1. Robert Zymek, 2018. "Bilateral Trade Imbalances," 2018 Meeting Papers 1117, Society for Economic Dynamics.
    2. Mark Mitchell & Robert Zymek, 2018. "Wealth of the Nation: Scotland's Productivity Challenge - Technical Appendix," Edinburgh School of Economics Discussion Paper Series 289, Edinburgh School of Economics, University of Edinburgh.
    3. Antonio Navas & Antonella Nocco, 2021. "Trade liberalization, selection, and technology adoption with vertical linkages," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 979-1012, September.
    4. Alonso de Gortari, 2018. "Disentangling Global Value Chains," 2018 Meeting Papers 139, Society for Economic Dynamics.
    5. Alonso de Gortari, 2019. "Disentangling Global Value Chains," NBER Working Papers 25868, National Bureau of Economic Research, Inc.
    6. Fritz Breuss, 2018. "25 Years Single Market: Which Trade and Growth Effects?," WIFO Working Papers 572, WIFO.

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    More about this item

    Keywords

    world input-output; development accounting; productivity;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F15 - International Economics - - Trade - - - Economic Integration
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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