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Vertical specialisation indicator based on supply-driven input-output model


  • Meng, Bo
  • Yamano, Norihiko
  • Webb, Colin


“Import content of exports”, based on Leontief’s demand-driven input-output model, has been widely used as an indicator to measure a country’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 sector’s exported output. However, this indicator only reflects one aspect of vertical specialisation – 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 sector’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 OECD’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.

Suggested Citation

  • Meng, Bo & Yamano, Norihiko & Webb, Colin, 2010. "Vertical specialisation indicator based on supply-driven input-output model," IDE Discussion Papers 270, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper270

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    References listed on IDEAS

    1. 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).
    2. Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
    3. 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.
    4. 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.
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    More about this item


    Developing countries; Developed countries; Input-output tables; International trade; Vertical specialisation; Ghosh inverse; Supply-driven; Input-output;

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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