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Measuring trade in value added with Firm-Level Data

Author

Listed:
  • Rudolfs Bems

    (International Monetary Fund)

  • Ayumu Ken Kikkawa

    (Sauder School of Business, University of British Columbia)

Abstract

Global Value Chains have proliferated economic policy debates. Yet a key concept – trade in value added –is likely mismeasured because of sectoral aggregation bias stemming from reliance on inputoutput tables. This paper uses comprehensive firm-level data on both domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added and, correspondingly, understated import content of gross exports. The economic magnitude of the estimated bias varies from moderate to large – at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firm import and export intensities and firm size determine the magnitude of the sectoral aggregation bias.

Suggested Citation

  • Rudolfs Bems & Ayumu Ken Kikkawa, 2019. "Measuring trade in value added with Firm-Level Data," Working Paper Research 378, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:201911-378
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    Cited by:

    1. Jean Imbs & Laurent L. Pauwels, 2020. "High Order Openness," Working Papers 20200047, New York University Abu Dhabi, Department of Social Science, revised Jun 2020.
    2. Carolina Calatayud & María Engracia Rochina Barrachina, 2023. "How do firms in Sub‐Saharan Africa benefit from global value chains?," South African Journal of Economics, Economic Society of South Africa, vol. 91(2), pages 214-241, June.
    3. A. Giunta & P. Montalbano & S. Nenci, 2022. "Consistency of micro- and macro-level data on global value chains: Evidence from selected European countries," International Economics, CEPII research center, issue 171, pages 130-142.
    4. Biswajit Banerjee & Juraj Zeman, 2022. "Determinants of global value chain participation: cross-country analysis," Indian Economic Review, Springer, vol. 57(1), pages 59-95, June.
    5. Hiau Looi Kee & Enze Xie & Xu,Mingzhi, 2024. "Firm Linkages and Domestic Value Added in Exports : Moving up the Global Value Chains with High-Speed Railways," Policy Research Working Paper Series 10985, The World Bank.
    6. Imbs, Jean & Pauwels, Laurent, 2025. "Measuring foreign exposure," Journal of International Economics, Elsevier, vol. 157(C).
    7. Kee, Hiau Looi & Xie, Enze, 2025. "Nickel, Steel and Cars : Export Ban and Domestic Value-Added in Indonesia," Policy Research Working Paper Series 11249, The World Bank.
    8. Alessandro Borin & Francesco Paolo Conteduca & Fabrizio Leone & Michele Mancini & Patrick Zoi, 2025. "How Global Are Local Value Chains?," CESifo Working Paper Series 12271, CESifo.
    9. Xinheng Liu & Ziyuan Pan & Dongli Fang, 2023. "Agglomeration, resource reallocation and domestic value‐added ratio in exports," Growth and Change, Wiley Blackwell, vol. 54(1), pages 182-213, March.
    10. Michele Mancini & Aaditya Mattoo & Daria Taglioni & Deborah Winkler, 2023. "Sub‐Saharan Africa's participation in global value chains: 1995–2021," The World Economy, Wiley Blackwell, vol. 46(11), pages 3192-3207, November.
    11. Wenxiao Wang & Faqin Lin & Fengning Huan & Yanyun Li, 2024. "Labour market flexibility and domestic value‐added trade: Evidence from the hukou reform in China," The World Economy, Wiley Blackwell, vol. 47(6), pages 2400-2444, June.
    12. Laurie S. M. Reijnders & Marcel P. Timmer & Xianjia Ye, 2021. "Labour demand in global value chains: Is there a bias against unskilled work?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2547-2571, September.
    13. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2021. "Correction to: Supply Chain Fragmentation and the Global Trade Elasticity: A New Accounting Framework," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 69(4), pages 681-681, December.
    14. Nobuaki YAMASHITA & Doan Thi Thanh HA, 2024. "The Third-country Effect of the United States-China Trade War on Viet Nam," Working Papers DP-2024-24, Economic Research Institute for ASEAN and East Asia (ERIA).
    15. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    16. Nobuaki Yamashita & Doan Thi Thanh Ha, 2022. "Participation in Global Value Chains and Rent Sharing by Small Firms in Viet Nam," Working Papers DP-2021-52, Economic Research Institute for ASEAN and East Asia (ERIA).

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    Keywords

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    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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