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Value-Added Trade and Regionalization. GTAP Eleventh Annual Conference 'Future of Global Economy', Helsinki, Finland

Listed author(s):
  • Guillaume Daudin

    (Observatoire français des conjonctures économiques)

  • Christine Rifflart

    (Observatoire français des conjonctures économiques)

  • Danielle Schweisguth

    (Observatoire français des conjonctures économiques)

For nearly two decades, growth of international trade has been underpinned by the development of intermediate goods cross exchanges resulting from a new international division of labour. The share of trade in inputs, also called vertical trade, has dramatically increased. Simultaneously, there has been some fear of excessive regionalization in trade. In this situation, the traditional trade measures based on the values of goods crossing borders are inappropriate to measure how self-centred are different regions. This paper suggests a new measure of international trade: “value-added trade”. Compared to “standard” trade, “value-added trade” is net of double-counted vertical trade and reallocates trade flows to input-producing industries. A database of value-added trade is made using the GTAP trade and input-output database for 66 regions (mostly countries) and 55 sectors in 1997 and 2001. In 2001, 26% of international trade were "only" vertical specialization trade, up from 25% in 1997. The share of services in value-added trade is much more important than in standard trade. East Asia still relies more heavily on extra-regional final markets than North America or Europe.

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File URL: http://spire.sciencespo.fr/hdl:/2441/9541/resources/4015.pdf
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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/9541.

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Date of creation: 12 Jun 2008
Handle: RePEc:spo:wpmain:info:hdl:2441/9541
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  1. Ng, Francis & Yeats, Alexander, 2003. "Major trade trends in East Asia : what are their implications for regional cooperation and growth," Policy Research Working Paper Series 3084, The World Bank.
  2. Richard E. Baldwin, 2011. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade," Chapters,in: International Handbook on the Economics of Integration, Volume I, chapter 2 Edward Elgar Publishing.
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  7. Guillaume Daudin & Paola Monperrus-Veroni & Christine Rifflart & Danielle Schweisguth, 2006. "Le commerce extérieur en valeur ajoutée," Revue de l'OFCE, Presses de Sciences-Po, vol. 98(3), pages 129-165.
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  9. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2005. "Vertical Production Networks in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 664-678, November.
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  12. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x, July.
  13. Joël Thomas Ravix & Olivier Sautel, 2007. "Comportements des firmes et commerce international," Revue de l'OFCE, Presses de Sciences-Po, vol. 100(1), pages 175-199.
  14. Ethier, Wilfred J, 1998. "The New Regionalism," Economic Journal, Royal Economic Society, vol. 108(449), pages 1149-1161, July.
  15. 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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  17. Jörn Kleinert, 2003. "Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing, or Increasing Importance of MNE Networks?," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 464-482, 08.
  18. Hartmut Egger & Peter Egger, 2005. "The Determinants of EU Processing Trade," The World Economy, Wiley Blackwell, vol. 28(2), pages 147-168, 02.
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