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A World Factory in Global Production Chains: Estimating Imported Value Added in Chinese Exports

Author

Listed:
  • Koopman, Robert
  • Wang, Zhi
  • Wei, Shang-Jin

Abstract

The rise of the People’s Republic of China (PRC) in world trade has brought both benefits and anxiety to other economies. For many policy questions, it is crucial to know the extent of foreign value added (FVA) in exports. We review a general formula in Koopman, Wang and Wei (2008) for computing domestic and foreign contents when processing exports are pervasive. In addition, we develop another formula for slicing up foreign content to allocate it among key individual economy’s supply chains, including sourcing from Japan and the United States. By our estimation, the share of foreign content in exports by the PRC is about 50%. There are also interesting variations across sectors. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly high foreign content (about 80%). By our estimation, Japan; the United States; Hong Kong, China; and the European Union are the major sources of foreign content in the PRC’s exports of computers and consumer electronics, two of its largest and fastest growing export categories.

Suggested Citation

  • Koopman, Robert & Wang, Zhi & Wei, Shang-Jin, 2009. "A World Factory in Global Production Chains: Estimating Imported Value Added in Chinese Exports," CEPR Discussion Papers 7430, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7430
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    Cited by:

    1. Shahid Yusuf, 2012. "From Technological Catch-up to Innovation : The Future of China’s GDP Growth," World Bank Other Operational Studies 12781, The World Bank.
    2. 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.

    More about this item

    Keywords

    domestic content; foreign value added; processing trade;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F1 - International Economics - - Trade

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