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Mapping Vertical Trade

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Abstract

The paper develops a method to map global networks of production sharing and processing trade. Relying on highly detailed bilateral trade data across a matrix of 75 countries, a network index gauges countries’ interdependence according to the extent of trade in parts and components for further processing and assembly of final export goods. The set of bilateral network relations is then subjected to an algorithm that lays it out for visualization as a world map of vertical trade networks. Maps are drawn in relation to processing trade across all industries, as well as for the electric/electronics and automotive industries, where such trade is most prominent. The analysis identifies three major hubs in the global networks: the People’s Republic of China in connection with Japan, Germany, and the United States. Apart from Mexico (mainly because of its maquiladoras network ties to the United States) the analysis highlights that outside Asia, developing countries are not yet involved in global production networks to any significant degree.

Suggested Citation

  • Ferrarini, Benno, 2011. "Mapping Vertical Trade," ADB Economics Working Paper Series 263, Asian Development Bank.
  • Handle: RePEc:ris:adbewp:0263
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    Cited by:

    1. Benno Ferrarini & Pasquale Scaramozzino, 2013. "Complexity, Specialization and Growth," CEIS Research Paper 275, Tor Vergata University, CEIS, revised 30 Apr 2013.

    More about this item

    Keywords

    Processing Trade; Network Analysis; Production Sharing; Factory Asia;

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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