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Measuring FDI and Trade-related Interdependence Across Countries: The Case of the United States and China

Author

Listed:
  • Zhi Wang
  • Shang-Jin Wei
  • Xinding Yu
  • Kunfu Zhu

Abstract

Based on the new integrated accounting framework of global supply chains (GSC) (Wang, Wei, Yu, and Zhu, 2025), we derive three types of economic dependence (producers’ dependence on upstream supplies, producers’ dependence on downstream markets, and consumers’ dependence on supply chains) that take into account of the presence of foreign invested firms as well as international trade. To measure indirect value flows between the origin and destination countries that are mediated through third economies, we show a need to go beyond both trade-in-value added and gross trade statistics. As an application, we derive new measures of inter-dependence between the United States and China.

Suggested Citation

  • Zhi Wang & Shang-Jin Wei & Xinding Yu & Kunfu Zhu, 2025. "Measuring FDI and Trade-related Interdependence Across Countries: The Case of the United States and China," NBER Working Papers 34226, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34226
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    JEL classification:

    • F0 - International Economics - - General
    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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