Evolution of Production Network: Measuring Trade in value

Evolution of Production

Network: Measuring Trade in

value-added (TiVA)

1

Norihiko YAMANO

Directorate for Science Technology and Industry, OECD

Working Party on Globalisation of Industry

Committee on Industry, Innovation and Entrepreneurship

May 2011

Domestic Production Network (GPN)

ICT products

Capital goods

Components

Coal

Further intermediate

Supply (Goods&Svc)

Primary inputs

•Labour input

•Capital services

•Other VA component

Household

consumption

Steel

Global production network (GPN)

ICT products

Capital goods

Components

Coal

Further intermediate supply (Goods&Svc)

Primary inputs

•Labour input

•Capital services

•Other VA component

Household

consumption

Steel

Expected outcomes

Database compilation and model development

Bilateral trade by end-use

Expanded coverage of Input output tables

Intercountry inter-industry model

‘NEW’ Indicators

Trade network

Production structure and key sectors

Positioning in international production network

Economic integration via global production

network

Main data sources: I-O and Bilateral trade

in goods and services

Analytical Harmonized Input-Output

44 countries (33 OECD countries) + some additional

Years:1995,2000,2005

Industry: 37 sectors based on ISIC/NACE Rev 3

system

Analytical Bilateral trade database

HS 6digit ISIC Rev.3

HS 6digit End Use (intermediate, HHCP, GFCF,

Passenger cars, Personal computers)

Various adjustments: Re-exports (HKG), unallocated

partners and sectors, missing links

* CIF/FOB and volume adjustments

Annual data

Detail sector information

Bilateral relationship

Trade Indicators

6

Sector composition of merchandise

trade

The world composition of traded goods remained stable in 1995-2005 –Chemicals (10% to 11%)

–Transport equipment (12% to 11%)

–Communication equipment (8% to 10%)

–General machinery (9% to 8%)

–Textile products (8% to 6%)

–Food manufacturing(6% to 5%),

OECD ITCS Exports, May 2011

International specialisation (increased shares 1995-2006, more than 10% share of total exports)

▫ Mining (ISIC 10-14) in CA, MX, BR, CL / RU /

▫ Textile (ISIC17-19) in IT

▫ Chemicals (ISIC24) in US / BE,DE,ES,FR, GB / IN, KR,

SG, TW

▫ Machinery (ISIC29) in CZ, FI, JP

▫ Comm equip. (ISIC30) in MX / FI,HU / CN, MY, PH

▫ Computing machinery (ISIC32) in CN, TW, KR, PH,

SG,TH

▫ Motor vehicles (ISIC34) in US, BR / DE, FR, PL,HU,CZ

/ JP, KR

Export by Industry and End-Use

1995 World total export

0.3%0.2%

3.6%

3.2%

5.6%

0.5%

2.8%

2.6%

1%

8.9%

6%

17.2%

2.3%

9.1%

0.1%

0.2%

2.2%

2.3%

5.1%

0.5%

1.1%

0.6%

1.2%

1.9%

1%

7.1%

1%

3.9%

1.3%

1.2%

3%

0.6%

0.1%

0.4%

0.4%

1.1%

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

BRIIS

( 217 b$ )

CHINA

( 162 b$ )

OECD.AMERICA

( 1068 b$ )

OECD.ASIA.PACIFIC

( 820 b$ )

OECD.EU15

( 2279 b$ )

OECD.Others

( 260 b$ )

Rest of World

( 1034 b$ )

Intermediate goods for assemblyOther intermediate goodsCapital goodsPersonal PC & passenger carsHousehold consumptionUnspecified


0.3%1.7%

2.1%

1.9%

4.4%

1%

3.3%

3.8%

3.5%

6.6%

4.6%

13.8%

3.3%

13.4%

0.3%

2.7%

1.6%

1.6%

4.1%

0.7%

1.1%

0.7%

3.4%

1.7%

0.6%

6.5%

1.5%

2.5%

0.1%

0.9%

0.7%

0.7%

1.8%

0.4%

0.4%

0.1%

0.9%

0.3%

0.8%

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )



0.3%1.7%

2.1%

1.9%

4.4%

1%

3.3%

3.8%

3.5%

6.6%

4.6%

13.8%

3.3%

13.4%

0.3%

2.7%

1.6%

1.6%

4.1%

0.7%

1.1%

0.7%

3.4%

1.7%

0.6%

6.5%

1.5%

2.5%

0.1%

0.9%

0.7%

0.7%

1.8%

0.4%

0.4%

0.1%

0.9%

0.3%

0.8%

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )

BRIIS

( 767 b$ )

CHINA

( 1778 b$ )

OECD.AMERICA

( 1957 b$ )

OECD.ASIA.PACIFIC

( 1387 b$ )

OECD.EU15

( 4539 b$ )

OECD.Others

( 1003 b$ )

Rest of World

( 3062 b$ )


Export by industry and enduse

Counting the dominant partner links to

identify the demand and supply hubs

• Demand hub (l)

–Count the partners’ export link that depends on

country l’s economy at given threshold t

export (k,l) / Σl export (k,l) > t %

• Supply hub(k)

–Count the partners’ import link that depends on

country l’s economy at given threshold t

import (k,l) / Σl import (k,l) > t %

Major Trade Partners for Asia’s Intermediate

Exports in Goods and Services

Notes: EU7 is Belgium, Germany, France, Italy, Netherlands, Spain and United Kingdom. Each arrow indicates that a partner’s share of a country’s total exports is greater

than 15%.

Source: OECD Input-Output Database, March 2010; IDE-JETRO Asian International Input-Output Database 2006; OECD Bilateral Trade Database, March 2010; OECD Trade

in Services, January 2010.

Global share of intermediate

exports (2000, 2008)

Manufacturing parts Motor vehicle parts

Findings (trade indicators)

Significant changes in industry and category

components of exports in most Asian

economies (China’s machinery, textile, etc)

Asian and North American production networks

have integrated. However structure of Europe

basically remains stable after the mid1990s.

China replaced Japanese and US positions as

manufacturing hub in Asia-Pacific region.

However, Japanese share of parts and

components in some sectors (Electronics and

motor vehicles) remains high.

Input-output model is useful data

source to link international trade and

domestic primary contents

Trade in value-added

15

Indicators

(vertical specialization)

Import contents of exports

Imp Partner Country A Exp Partner

Imports Exports

Exports

Re-exported imports

Imp Partner Country A Exp Partner

Imports Exports

Imports Domestic

Import contents of exports

= M (I-A)-1 Exports/Total exports

Re-exported imports

= Imports (I-Gd)-1 e/Total imports

(Hummels et al

2001)

(Meng et al

2010)

Import contents of exports (ICE)

0%

10%

20%

30%

40%

50%

60%

70%

Jap

anIn

dia

Ind

on

esi

aV

iet

Nam

Ch

ina

Ko

rea

Ph

ilip

pin

es

Thai

lan

dC

hin

ese

Tai

pe

iSi

nga

po

reG

ree

ceP

ola

nd

Swit

zerl

and

Fran

ceG

erm

any

No

rway

Un

ite

d …

Ro

man

iaIt

aly

Spai

nC

zech

Re

p.

Fin

lan

dD

en

mar

kSw

ed

en

Slo

vak …

Au

stri

aN

eth

erl

and

sP

ort

uga

lSl

ove

nia

Mal

aysi

aB

elg

ium

Luxe

mb

ou

rgH

un

gary

Esto

nia

Ire

lan

dU

nit

ed

Sta

tes

Bra

zil

Arg

en

tin

aC

hile

Can

ada

Me

xico

Sou

th A

fric

aR

uss

iaTu

rke

yA

ust

ralia

Isra

el

Ne

w Z

eal

and

1995

2005

Import contents of exports (ICE)

by industry group

Notes: Higher technology-intensive manufacturing group is defined as ISIC Rev.3 24, 29-35; lower technology-intensive manufacturing group is defined as

ISIC Rev.3 15-23, 25-28, 36-37; services sector is ISIC Rev.3 50-95.

Sources: OECD Input-Output Database, October 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

2005High(ISIC24,29-33,35)

2005Low(ISIC15-23,25-28,34,36-37)

Intermediate imports end up in

exports

Asia Europe Americas Row

0

10

20

30

40

50

60

70

80

90

100

Un

ite

d S

tate

sB

razi

lC

hile

Can

ada

Me

xico

Au

stra

liaJa

pan

Ind

on

esi

aIn

dia

Ch

ina

Ko

rea

Thai

lan

dC

hin

ese

Tai

pe

iN

orw

ayU

nit

ed

Kin

gdo

mG

erm

any

Fran

ceG

ree

ceIt

aly

Po

lan

dR

om

ania

Spai

nA

ust

ria

Ne

the

rlan

ds

Swe

de

nD

en

mar

kFi

nla

nd

Po

rtu

gal

Be

lgiu

mSl

ove

nia

Cze

ch R

ep

ub

licSl

ova

k R

ep

ub

licEs

ton

iaIr

ela

nd

Hu

nga

ryLu

xem

bo

urg

Sou

th A

fric

aTu

rke

yIs

rae

l

total Induced VA (other) Induced VA (labour)

Contribution of exports on GDP:

Induced value-added (% of exports)

OECD I-O May 2011

Asia Europe

Americas Row

Intercountry-based

production fragmentation indicator

21

1. Induced global trade / Exports

2. Average Propagation Link another advanced

indicates the complexity of inter-industry

transactions (both domestic and foreign)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05

Singapore Malaysia Philippines Thailand Chinese Taipei

Korea China Indonesia New Zealand Australia Japan India

IDF VS

(1.0 = Goods and Services exported as final expenditure)

Fragmentation index (1995/2005)

22

Country decreased direct VS

Increased indirect fragmentation

APL: Domestic and inter-

country length (total,1995/2005)

0

0.5

1

1.5

2

2.5

95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05 95 05

China Malaysia Chile Singapore Korea Austria Germany Japan France United States

Greece Viet Nam

inter-country

domestic

USA

Findings (inter-country model)

Increased inter-country spillover effects =>

decreased domestic contribution of exports on

output and GDP. In particular, final demand in

developing economies induces more value-

added in neighbour developed economy.

Production chains become more complex in

inter-country parts (intermediate trade + APL)

due to the production propagations in foreign

area.

Domestic and inter-country length

(Electric Machinery,1995/2005)

0

0.5

1

1.5

2

2.5

3

95 05 95 05 05 95 95 05 95 05 95 05

China Germany Japan United States

Austria Canada

inter-country

domestic

Example of specific products

import contents

0

1

2

3

4

5

6

7

8

9

10

Japan Korea China

Basic metals included in partner' exportsUSA (Billion USD, 2005)

Machinery(29)

Office machinery(30)

Electronic machinery(31)

Motor vehicles (34)

Documents

Evolution of Production Network: Measuring Trade in value