Vertical specialisation indicator based on supply-driven input-output model
â€œImport content of exportsâ€ , based on Leontiefâ€™s demand-driven input-output model, has been widely used as an indicator to measure a countryâ€™s degree of participation in vertical specialisation trade. At a sectoral level, this indicator represents the share of inter-mediates imported by all sectors embodied in a given sectorâ€™s exported output. However, this indicator only reflects one aspect of vertical specialisation â€“ the demand side. This paper discusses the possibility of using the input-output model developed by Ghosh to measure the vertical specialisation from the perspective of the supply side. At a sector level, the Ghosh type indicator measures the share of imported intermediates used in a sectorâ€™s production that are subsequently embodied in exports by all sectors. We estimate these two indicators of vertical specialisation for 47 selected economies for 1995, 2000, 2005 using the OECDâ€™s harmonized input-output database. In addition, the potential biases of both indicators due to the treatment of net withdrawals in inventories, are also discussed.
|Date of creation:||Dec 2010|
|Date of revision:|
|Publication status:||Published in IDE Discussion Paper. No. 270. 2010. 12|
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- David L. Hummels & Jun Ishii & Kei-Mu Yi, 1999.
"The nature and growth of vertical specialization in world trade,"
72, Federal Reserve Bank of New York.
- Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
- David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
- Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
- Norihiko Yamano & Bo Meng & Kiichiro Fukasaku, 2011. "Fragmentation and Changes in the Asian Trade Network," Working Papers PB-2011-01, Economic Research Institute for ASEAN and East Asia (ERIA).
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