Trade in Intermediate Goods Trade in Intermediate Goods and Servicesand Services
Rainer Lanz, Sébastien Miroudot, Alexandros Ragoussis
Trade Policy Linkages and Services DivisionOECD Trade and Agriculture Directorate
WPTGS, 18 November 2009
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•“Vertical Trade, Trade Costs and FDI” (TAD/TC/WP(2008)23/FINAL)
•“Trade in Intermediate Goods and Services” (TAD/TC/WP(2009)1/FINAL)
•Next year:
– Intra-firm trade and investment
– Trade in tasks
•Next Programme of Work and Budget (2011-2012): analysis of trade flows in value-added?
Trade and activities of multinational enterprises:Trade and activities of multinational enterprises:Programme of work of the OECD Trade CommitteeProgramme of work of the OECD Trade Committee
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•Objectives of the study:
– To assess trade flows of intermediate goods and services among OECD countries and with their main trade partners
– To analyse the determinants of trade in intermediate inputs
– To look at the relationship between productivity and trade in intermediates at the industry level
Trade in intermediate goods and servicesTrade in intermediate goods and services
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•OECD International Trade by Commodity Statistics (ITCS) database
•UN Broad Economic Categories (BEC) classification
– Based on the Standard International Trade Classification (SITC Rev. 3)
•Grouping of commodities according to main end use:
– capital goods
– intermediate goods
– consumption goods
– not classified (motor spirit, passenger motor cars, goods n.e.s.)
Intermediate goods in trade dataIntermediate goods in trade data
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•I-O tables present in matrix format the supply side and the demand side of an economy
•OECD I-O database 2009 edition
– 39 countries, 48 industries (aggregated to 29)
– Year coverage: 1995, 2000 and 2005 (ideally)
•Identification of both the industry of origin and using industry
1.Allows distributing bilateral trade over using industries k
2.Estimation of bilateral imports of intermediate services
Input-Output (I-O) TablesInput-Output (I-O) Tables
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•mijpt – bilateral imports of inputs p ( BEC trade data)
•αipkt - share of imported inputs p used by industry k ( I-O tables)
•Five dimensions: importer i, exporter j, industry of origin p, using industry k and year t
Combining trade data with I-O tablesCombining trade data with I-O tables
ijptipktijpkt mI
• Imports of intermediate inputs p from country j by industry k in country i:
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Share of intermediate to total tradeShare of intermediate to total trade
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Intermediate to total trade - Goods Intermediate to total trade - Services
1. Intermediate goods and services dominate trade flows
2. Share in total trade has remained fairly constant over time
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Intra- and inter-regional imports of intermediate Intra- and inter-regional imports of intermediate goods (Billion USD, 2006)goods (Billion USD, 2006)
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Share of regions in world intermediate goods Share of regions in world intermediate goods imports (2006)imports (2006)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0Food products
Textiles and wearing apparel
Wood,publishing and printing
Refined petroleum & other treatments
Chemical products
Rubber and plastic products
Metal products
Mechanical productsOffice machinery and computers
Radio,TV,communication equipments
Medical, precision and optical instruments, watches and clocks
Motor vehicles
Other transport equipments
Other manufacturing
Electricity, gas and water
Asia Europe (excluding intra-EU trade) North America
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•In comparison to imports for final consumption, imports of intermediates are
– more sensitive to trade costs
– less attracted by bilateral market size
•The activity of multinational enterprises impacts positively imports of intermediate inputs
Econometric analysisEconometric analysis
Gravity regressionsGravity regressions
Production function regressionsProduction function regressions• A higher use of foreign inputs increases the productivity
of domestic industries
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•Trade in intermediates is more sensitive to trade barriers.
– Policies aiming at fully benefiting from international production networks should reach a higher degree of trade liberalisation. But tariff escalation should be avoided.
•Trade in intermediates has an important regional dimension.
•Trade in intermediates depends less on the size of the market and on the "home bias" of consumers.
– This represents a chance for emerging economies and small economies that can specialise in the production of inputs.
Main policy conclusions of the analysisMain policy conclusions of the analysis
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Thank you for your attention!Thank you for your attention!
