IDEAS home Printed from https://ideas.repec.org/p/wii/wpaper/81.html
   My bibliography  Save this paper

Trade in Value Added and the Valued Added in Trade

Author

Listed:
  • Robert Stehrer

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

This paper discussed two measures of value added flows between countries ‘Trade in value added’ accounts for value added of one country directly and indirectly embodied in final consumption of another country. ‘Value added in trade’ measures the value added embodied in gross trade flows. The paper shows that both measures result in the same overall net trade of a country which equals its trade balance in gross terms which however does not hold for bilateral relations. These value added flows can further be broken down by various production factors including capital and labour income by educational attainment categories. Using the recently compiled World Input-Output Database (WIOD) selected results comparing the EU-27, the USA, Japan and China based on both concepts regarding value added flows across countries are presented. For example, the US trade deficit with China is reduced by about 25% but would increase with respect to the EU-27 by about 20%. These imbalances are further broken down by factor incomes.

Suggested Citation

  • Robert Stehrer, 2012. "Trade in Value Added and the Valued Added in Trade," wiiw Working Papers 81, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:wpaper:81
    as

    Download full text from publisher

    File URL: https://wiiw.ac.at/trade-in-value-added-and-the-valued-added-in-trade-dlp-2620.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Guillaume Daudin & Christine Rifflart & Danielle Schweisguth, 2011. "Who produces for whom in the world economy?," Canadian Journal of Economics, Canadian Economics Association, vol. 44(4), pages 1403-1437, November.
    2. Umed Temurshoev & Marcel P. Timmer, 2011. "Joint estimation of supply and use tables," Papers in Regional Science, Wiley Blackwell, pages 863-882.
    3. Trefler, Daniel & Zhu, Susan Chun, 2010. "The structure of factor content predictions," Journal of International Economics, Elsevier, pages 195-207.
    4. Yuqing Xing & Neal Detert, 2010. "How iPhone Widens the US Trade Deficits with the PRC?," GRIPS Discussion Papers 10-21, National Graduate Institute for Policy Studies.
    5. Timmer,Marcel P. & Inklaar,Robert & O'Mahony,Mary & Ark,Bart van, 2013. "Economic Growth in Europe," Cambridge Books, Cambridge University Press, number 9781107412446, December.
    6. Trefler, Daniel & Zhu, Susan Chun, 2010. "The structure of factor content predictions," Journal of International Economics, Elsevier, pages 195-207.
    7. Helpman, Elhanan, 1984. "The Factor Content of Foreign Trade," Economic Journal, Royal Economic Society, vol. 94(373), pages 84-94, March.
    8. Umed Temurshoev & Marcel P. Timmer, 2011. "Joint estimation of supply and use tables," Papers in Regional Science, Wiley Blackwell, pages 863-882.
    9. Staiger, Robert W., 1986. "Measurement of the factor content of foreign trade with traded intermediate goods," Journal of International Economics, Elsevier, pages 361-368.
    10. Dennis Tao Yang & Junsen Zhang & Shaojie Zhou, 2012. "Why Are Saving Rates So High in China?," NBER Chapters,in: Capitalizing China, pages 249-278 National Bureau of Economic Research, Inc.
    11. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, pages 224-236.
    12. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ye, Ming & Meng, Bo & Wei, Shang-jin, 2015. "Measuring smile curves in global value chains," IDE Discussion Papers 530, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Foster-McGregor, Neil & Stehrer, Robert, 2013. "Value added content of trade: A comprehensive approach," Economics Letters, Elsevier, vol. 120(2), pages 354-357.
    3. Roman Stöllinger & Mario Holzner, 2017. "State Aid and Export Competitiveness in the EU," Journal of Industry, Competition and Trade, Springer, pages 203-236.
    4. Kuboniwa, Masaaki, 2014. "Fundamental Theorem on the Relationship between Trade Balances in Value Added and Gross Terms: Amendment," Discussion Paper Series 600, Institute of Economic Research, Hitotsubashi University.
    5. Meng, Bo & Fang, Yong & Yamano, Norihiko, 2012. "Measuring global value chains and regional economic integration : an international input-output approach," IDE Discussion Papers 362, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Lionel Fontagné & Ann Harrison, 2017. "The Factory-Free Economy: Outsourcing, Servitization and the Future of Industry," NBER Working Papers 23016, National Bureau of Economic Research, Inc.
    7. Suder, Gabriele & Liesch, Peter W. & Inomata, Satoshi & Mihailova, Irina & Meng, Bo, 2015. "The evolving geography of production hubs and regional value chains across East Asia: Trade in value-added," Journal of World Business, Elsevier, pages 404-416.
    8. Kuboniwa, Masaaki, 2014. "Bilateral Equivalence between Trade in Value Added and Value Added Content of Trade," Discussion Paper Series 601, Institute of Economic Research, Hitotsubashi University.
    9. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    10. Marlies Hanna Schütz & Nicole Palan, 2016. "Restructuring of the international clothing and textile trade network: the role of Italy and Portugal," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), pages 1-29.
    11. Roman Stöllinger, 2016. "Structural Change and Global Value Chains in the EU," wiiw Working Papers 127, The Vienna Institute for International Economic Studies, wiiw.
    12. Elizaveta Archanskaia, 2013. "Proximity as a Source of Comparative Advantage," Working Papers hal-01070440, HAL.
    13. Chen, Yenhuang, 2016. "Intra-industry fragmentation: Bilateral value added in electronics exports," Economics Letters, Elsevier, vol. 138(C), pages 22-25.
    14. Marlies Schütz & Nicole Palan, 2015. "Restructuring the International Textile Production and Trade Network. The Role of Italy and Portugal," FIW Working Paper series 156, FIW.
    15. Liou, Ruey-Wan & Lin, Hsing-Chun & Chang, Ching-Cheng & Hsu, Shih-Hsun, 2016. "Unveiling the true value of across-strait trade: The global value chain approach," China Economic Review, Elsevier, vol. 41(C), pages 159-180.
    16. Diakantoni, Antonia & Escaith, Hubert, 2012. "Reassessing effective protection rates in a trade in tasks perspective: Evolution of trade policy in factory Asia," WTO Staff Working Papers ERSD-2012-13, World Trade Organization (WTO), Economic Research and Statistics Division.
    17. Ferraz, Lucas Pedreira do Couto & Ribeiro, Marcel & Monasterio, Pedro, 2017. "On the Effects of Non-Tariff Measures on Brazilian Exports," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    18. Meng, Bo & Xue, Jinjun & Feng, Kuishuang & Guan, Dabo & Fu, Xue, 2013. "China’s inter-regional spillover of carbon emissions and domestic supply chains," Energy Policy, Elsevier, vol. 61(C), pages 1305-1321.
    19. Diakantoni, Antonia & Escaith, Hubert, 2012. "Reassessing effective protection rates in a trade in tasks perspective: Evolution of trade policy in factory Asia," WTO Staff Working Papers ERSD-2012-13, World Trade Organization (WTO), Economic Research and Statistics Division.
    20. Roman Stöllinger, 2017. "Global Value Chains and Structural Upgrading," wiiw Working Papers 138, The Vienna Institute for International Economic Studies, wiiw.
    21. Enrique Gilles, 2015. "Una medición del valor agregado generado por las exportaciones colombianas," DOCUMENTOS DE TRABAJO EAN 012975, UNIVERSIDAD EAN.
    22. ye, ming, 2016. "Trace the goods and value-added route in exports," MPRA Paper 73476, University Library of Munich, Germany.
    23. Agata Kliber & Paweł Kliber & Piotr Płuciennik & Małgorzata Piwnicka, 2016. "POLONIA dynamics during the years 2006–2012 and the effectiveness of the monetary Policy of the National Bank of Poland," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, pages 37-59.
    24. Neil Foster-McGregor & Mario Holzner & Michael Landesmann & Johannes Pöschl & Robert Stehrer & Roman Stöllinger, 2013. "A ‘Manufacturing Imperative’ in the EU – Europe's Position in Global Manufacturing and the Role of Industrial Policy," wiiw Research Reports 391, The Vienna Institute for International Economic Studies, wiiw.

    More about this item

    Keywords

    value added trade; factor content of trade; trade integration; vertical specialization; production networks;

    JEL classification:

    • F1 - International Economics - - Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F19 - International Economics - - Trade - - - Other

    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:wii:wpaper:81. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Customer service). General contact details of provider: http://edirc.repec.org/data/wiiwwat.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.