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The Similarity of Global Value Chains: A Network-Based Measure

Author

Listed:
  • Zhen Zhu

    () (IMT Institute for Advanced Studies Lucca)

  • Greg Morrison

    () (IMT Institute for Advanced Studies Lucca)

  • Michelangelo Puliga

    () (IMT Institute for Advanced Studies Lucca)

  • Alessandro Chessa

    () (IMT Institute for Advanced Studies Lucca)

  • Massimo Riccaboni

    () (IMT Institute for Advanced Studies Lucca and DMSI, K.U. Leuven, Leuven, Belgium)

Abstract

International trade has been increasingly organized in the form of global value chains (GVCs) where different stages of production are located in different countries. This recent phenomenon has substantial consequences for both trade policy design at the national or regional level and business decision making at the firm level. In this paper, we provide a new method for comparing GVCs across countries and over time. First, we use the World Input-Output Database (WIOD) to construct both the upstream and downstream global value networks, where the nodes are individual sectors in different countries and the links are the value-added contribution relationships. Second, we introduce a network-based measure of node similarity to compare the GVCs between any pair of countries for each sector and each year available in the WIOD. Our networkbased similarity is a better measure for node comparison than the existing ones because it takes into account all the direct and indirect relationships between country-sector pairs, is applicable to both directed and weighted networks with self-loops, and takes into account externally defined node attributes. As a result, our measure of similarity reveals the most intensive interactions among the GVCs across countries and over time. From 1995 to 2011, the average similarity between sectors and countries have clear increasing trends, which are temporarily interrupted by the recent economic crisis. This measure of the similarity of GVCs provides quantitative answers to important questions about dependency, sustainability, risk, and competition in the global production system.

Suggested Citation

  • Zhen Zhu & Greg Morrison & Michelangelo Puliga & Alessandro Chessa & Massimo Riccaboni, 2015. "The Similarity of Global Value Chains: A Network-Based Measure," Working Papers 9/2015, IMT Institute for Advanced Studies Lucca, revised Sep 2015.
  • Handle: RePEc:ial:wpaper:9/2015
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    References listed on IDEAS

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    1. repec:eee:phsmap:v:502:y:2018:i:c:p:164-184 is not listed on IDEAS
    2. repec:eee:phsmap:v:502:y:2018:i:c:p:148-163 is not listed on IDEAS
    3. Stefano Costa & Federico Sallusti, 2016. "Message from an Italian bottleneck: inter-industry relationships and efficiency spillover," Working Papers LuissLab 16128, Dipartimento di Economia e Finanza, LUISS Guido Carli.

    More about this item

    Keywords

    Networks; Node Similarity; Input-Output Analysis; Global Value Chains; Vertical Specialization; International Trade;

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration

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