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Ó wiiw1
Wiener Institut für Internationale Wirtschaftsvergleiche
The Vienna Institute for International Economic Studies
www.wiiw.ac.at
Robert StehrerThe Vienna Institute for International Economic Studies (wiiw)Robert.Stehrer@wiiw.ac.at
WTO workshop, February 2-4, 2011 – WTO, GenevaVersion: 2011-02-01
Decomposing net trade in value added and
the patterns of trade in factors
The WIOD-project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities, Grant Agreement no: 225 281.
Ó wiiw2
WIOD project – www.wiod.org
The World Input-Output Database (WIOD)
Project funded within the 7th framework program of the EU- 10+OECD partners involved- Project started in May 2009 and ends in April 2012
Construction and applications- Construction of inter-country SUT/IO tables- Socio-economic and environmental satellite accounts- Data publicly available in May 2012- Various applications ...
Ó wiiw3
WIOD project – Data coverage
Inter-country Supply-Use and Input-Output tables- Benchmarked to NA data
Period: 1995-2006 (maybe with extension)
40 countries included- EU-15 countries- EU-12 countries- NAFTA: Canada, USA, Mexico- BRI: Brazil, Russia, India- CHN: China- OTHER: Turkey, Japan, South Korea, Taiwan, Indonesia, Australia
Sector and product classifications of SUTs- 59 products (corresponding to CPA)- 35 industries (corresponding to NACE rev. 1)
Ó wiiw4
WIOD project – Data coverage
Trade data- Goods trade (HS 6-digit – use category – CPA)- Services trade (BoP codes)
Satellite accounts- Energy and environment (emmission, etc.)- Socio-economic indicators
Capital (ICT and Non-ICT) Labour by three educational attainment categories
Deflated tables
Ó wiiw5
Dataflows and construction steps
Public statistics National accounts Supply and use tables
International trade statistics
(time-series) (infrequent) (time-series)
Total Final demand by type Supply (Basic price) Imports and exportsTotal Export/Import Use (Purchasers' price) on bilateral basis
Value added by industry - of goodsGross output by industry - of services
HarmonisationEstimation
Supply (Basic price)Use (Basic price)Valuation matrix
Estimation
Supply (Basic price)Valuation matrix
Domestic use (Basic price)
Estimation
Time series World input-output tables
For each country
Bilateral import shares by use
Import use (Basic price) by delivering country
Time series for each country
Time series for each country
Ó wiiw6
Construction of International WIOT
Final domestic
use
Final domestic
use
Final domestic
use
Intermediate use
Intermediate use
Intermediate use
Country B
Final use of domestic
output
Rest of World
Final use by RoW of
exports from A
Final use by RoW of
exports from B
Output in RoW
Final use by B of exports
from A
Final use of domestic
output
Final use by B of exports from RoW
Country ACountry B
Industry
Intermediate use by B of
imports from RoW
Rest of World
Industry
Intermediate use by RoW of imports from
A
Intermediate use by RoW of imports from
B
Intermediate use of
domestic output
Country B
Rest of World (RoW)
Industry
Ind
ust
ry
Intermediate use of
domestic output
Ind
ust
ry
Country AOutput
in A
Final use of domestic
output
Total
Ind
ust
ry
Final use by A of exports
from B
Final use by A of exports from RoW
Intermediate use by B of
imports from A
Country A
Output in A
Value added
Output in B
Output in RoW
Intermediate use by A of
imports from B
Intermediate use by A of
imports from RoW
Intermediate use of
domestic output
Value added
Output in B
Value added
Ó wiiw7
Value added trade and the factor content of trade
Related literature
Vertical specialisation- Hummels, Ishii and Yi (2001), etc.- Daudin, Rifflart and Schweisguth (2008, 2009)- Johnson and Noguera (2009)- Koopman, Power, Wang and Wei (2010)- Many others- Focus on exports
Factor content of trade (when intermediates are traded)- Reimer (2006)- Trefler and Zhu (2010)- Focus on HOV and relationship of trade in factors to endowments
This approach:- Foster and Stehrer (2011), forthcoming- Focus: Decomposition of net trade in value added and components
Ó wiiw8
Accounting for trade in intermediates(following Reimer, JIE 2006; Trefler and Zhu, JIE 2010)
N … Number of countries; G … Number of industries; F … Number of factors
Direct plus indirect factor input
A … coefficient matrix of dimension NG x NGD … direct factor input matrix of dimension F x NG
‘Bilateral’ (NG x N) import-export matrix
1)( AIDB
][ rpxT
Value added trade and the factor content of trade
Ó wiiw9
Factor content of trade with three countries for country c=1
where
Some manipulations …
111 )(' tAIdt kk
Value added trade and the factor content of trade
),,( 312111 xxxt
3133321323*1313
3123221222*1212
3113121121*1111
1
xlvxlvxlv
xlvxlvxlv
xlvxlvxlv
Tk
Ó wiiw10
Value added trade and the factor content of trade
3133321323*1313
3123221222*1212
3113121121*1111
1
xlvxlvxlv
xlvxlvxlv
xlvxlvxlv
Tk
Direct exports
Indirect exports(‘true’ VS1 ) Direct imports
Re-Imports (VS1 )
Indirectimports
1*
1
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Selected results
Decomposition of net value added trade and components
Regional patterns of net value added trade and components
Notes: • Focus of presentation on EU-15 and NAFTA • January 2011 version of WIOD• ROW not included in calculations• Results partly based on imputed values regarding factor inputs
Ó wiiw12
Decomposition of value added trade
EU-15 NAFTAin bn US-$ in bn US-$
Ó wiiw13
Decomposition of trade in labour
EU-15 NAFTAin bn US-$ in bn US-$
Ó wiiw14
Decomposition of trade in high-educated labour
EU-15 NAFTAin bn US-$ in bn US-$
Ó wiiw15
Net exports of EU-15
Goods and services Value addedin bn US-$ in bn US-$
-300.0
-250.0
-200.0
-150.0
-100.0
-50.0
0.0
50.0
100.0
1995 2000 2005
BRI CHN EU12 EU15
NAFTA OTHER TOTAL
-300.0
-250.0
-200.0
-150.0
-100.0
-50.0
0.0
50.0
100.0
1995 2000 2005
BRI CHN EU12 EU15
NAFTA OTHER TOTAL
Ó wiiw16
Net exports of NAFTA
Goods and services Value addedin bn US-$ in bn US-$
Ó wiiw17
Net exports in labour and capital services – EU15
Labour Capitalin bn US-$ in bn US-$
Ó wiiw18
Net exports in labour and capital services – NAFTA
Labour Capitalin bn US-$ in bn US-$
Ó wiiw19
Net exports by educational categories
EU-15 NAFTAin bn US-$ in bn US-$
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Trade in value added: ICT capital
in bn US-$
Ó wiiw21
Next steps: Analysis
the obvious candidates which are mutually related• (Directed) Factor and sector biased technical change
• Change in trade and output patterns
• Change in intermediates trade
• Change in factor rewards
TAIDT fV1
, )(' Decomposition based on basic equation
Further steps, extensions, caveats: • Breakdown of trade data into final goods and intermediates (and subcomponents like P&C)• Sectoral breakdowns and differentiations• Bilateral relations• Testing HOV theorem with traded intermediates• Double counting problem• Non-competing imports
Ó wiiw22
Next steps: Data
Improvement on data Improving national SUTs Improving bilateral trade in services and trade in goods
• Re-exports
Improving breakdown by use categories (see below)• Comparing our use-classification of trade flows with official import IO tables.
Improving factor input data for non-OECD countries • as part of work by World KLEMS consortium
Constant price series
Additional data Processing export trade tables for Mexico and China Margin tables (transport costs, tariffs, and domestic margins of exports)
Ó wiiw23
Thank you for attention!
Robert Stehrer
The Vienna Institute for International Economic Studies – wiiw
www.wiiw.ac.at
Robert.Stehrer@wiiw.ac.at
The WIOD project: www.wiod.org
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