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___________________________________________________________________________ 2014/SOM2/CTI/DIA3/005 Development of Trade in Value-Added Indicators Using Global Input-Output Model Submitted by: OECD Public-Private Dialogue on Building Asia Pacific Partnership Through Global Value Chains Collaboration Qingdao, China 12 May 2014
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___________________________________________________________________________

2014/SOM2/CTI/DIA3/005

Development of Trade in Value-Added Indicators Using Global Input-Output Model

Submitted by: OECD

Public-Private Dialogue on Building Asia Pacific Partnership Through Global

Value Chains Collaboration Qingdao, China

12 May 2014

 

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DEVELOPMENT OF TRADE IN

VALUE-ADDED INDICATORS USING

GLOBAL INPUT-OUTPUT MODEL

Norihiko YAMANO

OECD Directorate for Science, Technology and Industry

APEC Public-Private Dialogue on Building Asia Pacific Partnership through Global Value Chains CollaborationQingdao, 12 May 2014

• Jan 2012: OECD-WTO TiVA concept note• Apr 2012: TiVA project is announced by SG at G20• Sep 2012: Preliminary estimates are presented at high level

conference in Beijing• Jan 2013: Launch of Database: Indicators for 40 countries;

18 industries; 2005, 2008, 2009; 17 economy notes• May 2013: OECD Ministerial meeting. First revision:

Indicators for 56 economies; 18 industries; 1995, 2000, 2005, 2008, 2009; 40 economy notes

• May 2014: OECD/G20 GVC Workshop. Extensions

Background: What we developed under TiVA project

2

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• Autarky

• Final goods trade (pre-globalised world*)

• (steam revolution, 1st unbundling*)

• Vertical specialisation (intermediate imports for exporting activity)

• Fragmentation of production stages

(ICT revolution, 2nd unbundling*)

• Distance and borders (regions) still matters

A brief history of globalisation of production networks

* Baldwin 3

Export by sector (1995,2009)

4

Source: OECD Inter-country I-O (May 2013)

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Export by sector (2009)

5

Source: OECD Inter-country I-O (May 2013)

• Trade dependency – (Export+Import)/GDP

– Net exports /GDP

• Offshoring and import contents of exports

• Bilateral trade relationship (intra-industry, end-use trade patterns)

• Various trade flow analyses (gravity equations)

A brief history of globalisation indicators using Industrial databases

6

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• Interconnectedness

• Alternative presentation of trade relationship across countries

• Direct and indirect economic effects of trade

What is TiVA?

7

economy and industry/product dimensions

Economy- VA source economy- Exporting economy- Importing economy- Final expenditure economy

Industry / Product- VA source industry- Products form exporting

industry- Importing industry- Final expenditure products

8

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Value-added embodied in exports

Domestic VA(Direct)

Domestic VA(Indirect)

Foreign VA

Re-importedDomestic VA

Export ForeignIndustry

and Households

Import partners

9

Value-added embodied in gross exports

Value-added embodied in foreign final demand

Domestic VA(Direct)

Foreign VA

Direct exports ForeignCustomers

(final consumption)

Domestic VA(Indirect)

Production networks

abroad

10

Value-added embodied in foreign final demand

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Core of the TiVA database is an economic model based on Inter-country Input-Output table (ICIO).These ICIO models allow us to analyse- Intermediate trade flows of goods and services- Harmonised (mirror) bilateral trade balances- Sectoral GDP and output at global level- Value-added contents by source economy and industry of

additional unit demand (exports and domestic demand)- Consumption and investment activity by type of goods

and services

Methodology

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• Collection of data sources• Harmonisation of main aggregate

components of National Accounts• Harmonisation of national I-O• Adjustment of bilateral trade coefficient• Development of ICIO• Indicator calculations• Dissemination

Development flow: Inter-country I-O and indicators (TiVA)

12

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• Institutional long-term

• Official I-O data used for all countries

• Benchmarked to National Accounts (exports, imports and value-added)

• Benchmarked to Balance of Payment

• Allocation trade by end-use categories

• Re-exports adjustment

• Rest of the world (closed model)

OECD ICIO development approach

13

Using and Interpreting TiVA data

14

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High foreign content share of exports: lower value-added? lower productivity? and lower skills? Fewer jobs?

Source: OECD-WTO Trade in Value-Added database

15

16 / 57

Domestic VA share in gross exports (China, 1995)

1995: 141 USD Billion

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Domestic VA share in gross exports (China, 2008)

2008: 1527 USD Billion

18

Gross exports, China 1995-2008

1995: 141 USD Billion

2008: 1527 USD Billion

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How many jobs sustained by foreign final demand

19

0

10

20

30

40

50

60

70

Kore

a Re

p.

Chin

a

Russ

ian

Fed.

Mex

ico

Indo

nesia

Japa

n

Aust

ralia

Uni

ted

Stat

es

% 2008 1995

Selected APEC economiesSource: OECD, Science, Technology and Industry Scoreboard, 2013

0

10

20

30

40

50

60

%EU27 NAFTA East and Southeast Asia China Other

Source: OECD, Science, Technology and Industry Scoreboard, 2013

Foreign value added in household consumption, by source region, 2009

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• Data and Model– Industry details

– Procurement of imported goods are assumed to be proportional for all sectors

– Rest of the world (more developing economies)

– Heterogeneity within a economy (e.g. different production system of exporters and non-exporters)

• TiVA Indicator Calculation– Better presentation and dissemination tools

– Region-to-Region rather than economy-to-economy

Caveats – rooms for improvements

21

• Harmonisation issues of SNA and National IO/SUT

• Price valuation (producers’price / basic price)

• Relationship between imported goods and trade related services

• Non-resident expenditures

… Trade balancing issues

General data issues

22

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• Imports in f.o.b. price in addition to c.i.f.

• Reconciliations of bilateral trade positions

• Balance of payment in goods by sector and by partner

• Heterogeneity within a industry in a economy: firm size, exporting firm, foreign owned and export processing zone, etc

What can countries do to improve quality

23

Asian Pacific countries specific issues

24

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• Trade balancing issues

• Bilateral trade partner shares

• Relationship between imported goods and trade related services

• National I-O tables are not published for all years. More sources required for better quality

ICIO compilation issues

25

• Expanding countries and more detail industry level• Quality enhancement

– Introducing better balancing techniques– Estimates based on annual supply-use tables– Sectoral value-added and gross output

• Format– SNA2008 , ISIC Rev4 based sector

• Underlying ICIO model dissemination• Improved dissemination tools• More indicators

Future extensions (short & medium term)

26

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• Indirect effects • Technological coefficient • Global Value Chain • Production stages • Propagation and Length• Distance to consumers• Comparative Advantage • Participation

Terminology to Avoid (or Use with Care) as indicator names

27

• TiVA http://oe.cd/tiva• OECD.Stathttp://stats.oecd.org/Index.aspx?DataSetCode=TIVA_OECD_WTO

http://stats.oecd.org/Index.aspx?DataSetCode=TIVAORIGINVA

• Global value chainshttp://www.oecd.org/sti/ind/global-value-chains.htm

• Carbon footprinthttp://www.oecd.org/sti/inputoutput/co2

• Jobs sustained and consumption behaviour indicators, Scoreboard 2013, OECD (Chapter Participating in the global economy)

http://www.oecd-ilibrary.org/science-and-technology/oecd-science-technology-and-industry-scoreboard-2013_sti_scoreboard-2013-en

How to access TiVA database and related ICIO analyses

28

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Appendix

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Data sourcesSupply-use and Input-Output tables (National sources/ Eurostat / Asian Dev Bank)

Bilateral trade statistics for goods and services (OECD / UN)

Economy submitted National Accounts (OECD / UN)

Balance of Payments (National source / IMF)

Intermediate analytical data products at OECDHarmonised symmetric Input-Output tables (OECD I-O)

Bilateral Trade Database by Industry and by End-use for goods (BTDIxE)

Sectoral Value-Added (STAN)

Harmonised Bilateral Trade in Services (OECD-WTO)

Adjusted National Accounts (currency, discrepancy and re-exports)

Components of Inter-country I-OUpdate estimates for missing tables for reference years

Reconciliation of I-O and BTD figures with National Accounts

Estimated Bilateral Trade in Services by Industry(EBTSI)

Data sources for OECD Inter-country inter-industry model

30

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Indicator CodeGross exports (GBR to USA) EXGR

GBR (VA) GBR (exports) World EXGR_DVA

GBR (VA) Consumption in foreign countries (e.g.DEU)

FDDVA

Foreign VA embodied in imports (e.g.FRA) GBR(exports) World

FVA_EXGR

Intermediate imports GBR (exports) World to total intermediate imports ratio

REI

Domestic VA embodied in imports GBR EXGR_RIM

Relative sectoral shares (RCAs) RCA

TiVA Indicator groups

31

OECD All OECD 34 countries

BRIICSBrazil, China, India, Indonesia, RussianFederation, South Africa

Other EU27Bulgaria, Cyprus, Latvia, Lithuania, Malta, Romania

Other G20 Argentina, Saudi Arabia

Other South Eastern Asia

Brunei Darussalam, Cambodia, Malaysia, Philippines, Singapore, Thailand, Viet Nam

Other Eastern Asia Chinese Taipei, Hong Kong ChinaOther Rest of the World

Coverage

57 economies + RoW , 1995- 2009

32

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Industry

33


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