IDEAS home Printed from https://ideas.repec.org/p/tsu/tewpjp/2023-001.html
   My bibliography  Save this paper

The Value Added-Exports Puzzle and Global Value Chains

Author

Listed:
  • Zhe Chen
  • Yoshinori Kurokawa

Abstract

While most OECD countries experienced declines in manufacturing value added relative to GDP over 1970-2001, they have experienced increases in manufacturing exports relative to GDP during the same period. Bergoeing et al. (2004) documented this "value added-exports puzzle" and predicted that vertical specialization can explain it. Using the 1995-2018 data for 22 OECD countries and 17 manufacturing industries, we empirically investigate whether vertical specialization, or global value chain (GVC) participation, is a factor significantly affecting the puzzle. Our regressions show that the puzzle is stronger for countries and industries with the greater GVC backward linkage, while it is weaker for countries and industries with the greater GVC forward linkage. We also find that the puzzle is weaker for countries and industries that focus more on the upstream stage. Thus Bergoeing et al. (2004) were right, but we must be careful that the two measures of vertical specialization, the backward and forward GVC linkages, have the opposite effects.

Suggested Citation

  • Zhe Chen & Yoshinori Kurokawa, 2023. "The Value Added-Exports Puzzle and Global Value Chains," Tsukuba Economics Working Papers 2023-001, Faculty of Humanities and Social Sciences, University of Tsukuba.
    • Handle: RePEc:tsu:tewpjp:2023-001
    as

    Download full text from publisher

    File URL: https://pepp.hass.tsukuba.ac.jp/RePEc/2023-001.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Matthias Flückiger & Markus Ludwig, 2015. "Chinese export competition, declining exports and adjustments at the industry and regional level in Europe," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 1120-1151, August.
    2. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    3. Ping Hua, 2021. "How did China's GVCs participation influence its manufacturing productivity?," Working Papers hal-03505687, HAL.
    4. Kehoe, Timothy J. & Rossbach, Jack & Ruhl, Kim J., 2015. "Using the new products margin to predict the industry-level impact of trade reform," Journal of International Economics, Elsevier, vol. 96(2), pages 289-297.
    5. Dalton, John, 2013. "A Theory of Just-in-Time and the Growth in Manufacturing Trade," MPRA Paper 48223, University Library of Munich, Germany.
    6. Moritz Cruz, 2015. "Premature de-industrialisation: theory, evidence and policy recommendations in the Mexican case," Cambridge Journal of Economics, Oxford University Press, vol. 39(1), pages 113-137.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chingunjav Amarsanaa & Yoshinori Kurokawa, 2021. "The Extensive Margin of International Trade in a Transition Economy: The Case of Mongolia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(4), pages 648-673, December.
    2. Prema-chandra Athukorala & Archanun Kohpaiboon, 2010. "East Asia in World Trade: The Decoupling Fallacy, Crisis, and Policy Challenges," FIW Working Paper series 052, FIW.
    3. Kevin X. D. Huang & Zheng Liu, 2004. "Multiple stages of processing and the quantity anomaly in international business cycle models," Working Papers 04-8, Federal Reserve Bank of Philadelphia.
    4. Cherkashin, Ivan & Demidova, Svetlana & Kee, Hiau Looi & Krishna, Kala, 2015. "Firm heterogeneity and costly trade: A new estimation strategy and policy experiments," Journal of International Economics, Elsevier, vol. 96(1), pages 18-36.
    5. Yuko Imura, 2023. "Reassessing Trade Barriers with Global Production Networks," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 77-116, December.
    6. Mina Kim & Deokwoo Nam & Jian Wang & Jason J. Wu, 2013. "International trade price stickiness and exchange rate pass-through in micro data: a case study on U.S.–China trade," Globalization Institute Working Papers 135, Federal Reserve Bank of Dallas.
    7. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2018. "Global Firms," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 565-619, June.
    8. -, 2016. "The South American input-output table: Key assumptions and methodological considerations," Documentos de Proyectos 40832, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Deborah L. Swenson, 2007. "Competition and the location of overseas assembly," Canadian Journal of Economics, Canadian Economics Association, vol. 40(1), pages 155-175, February.
    10. Çakır, Mustafa Yavuz & Kabundi, Alain, 2013. "Trade shocks from BRIC to South Africa: A global VAR analysis," Economic Modelling, Elsevier, vol. 32(C), pages 190-202.
    11. Njike, Arnold, 2020. "Trade in value-added and the welfare gains of international fragmentation," MPRA Paper 100427, University Library of Munich, Germany.
    12. Marek Rojíček, 2010. "Konkurenceschopnost obchodu ČR v procesu globalizace [Competitiveness of the Trade of the Czech Republic in the Process of Globalisation]," Politická ekonomie, Prague University of Economics and Business, vol. 2010(2), pages 147-165.
    13. Inmaculada Martínez-Zarzoso & Martina Vidovic & Anca M. Voicu, 2014. "EU-Accession Effects on Sectoral Trade: A Helpman-Melitz-Rubinstein Approach with Panel Data," CESifo Working Paper Series 4903, CESifo.
    14. Raphael Bergoeing & Timothy J. Kehoe & Vanessa Strauss-Kahn & Kei-Mu Yi, 2004. "Why Is Manufacturing Trade Rising Even as Manufacturing Output is Falling?," American Economic Review, American Economic Association, vol. 94(2), pages 134-138, May.
    15. Byron Gangnes & Ari Van Assche, 2010. "Global Production Networks in Electronics and Intra-Asian Trade," Working Papers 201004, University of Hawaii at Manoa, Department of Economics.
    16. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-158, March.
    17. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    18. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Ad libros publications inc., vol. 21(3-4), pages 7-34, November.
    19. Gao, Yue & Whalley, John & Ren, Yonglei, 2014. "Decomposing China's export growth into extensive margin, export quality and quantity effects," China Economic Review, Elsevier, vol. 29(C), pages 19-26.
    20. Nouf Alsharif & Sambit Bhattacharyya & Maurizio Intartaglia, 2016. "Economic Diversification in Resource Rich Countries: Uncovering the State of Knowledge," Working Paper Series 09816, Department of Economics, University of Sussex Business School.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tsu:tewpjp:2023-001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Yoshinori Kurokawa (email available below). General contact details of provider: https://edirc.repec.org/data/iptsujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.