STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Vertical Specialisation

and

Global Value Chains

OECD Statistics Directorate

Sonia.Araujo@oecd.org

Agenda

Item : 9.5.2.

STD/SES/TAGS; 2nd WPTGS Meeting 16.-18.11.2009, Paris

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Global Value Chains

• A New Structure of Internationalisation of Production

Production processes are broken down in several stages

• Implications for Trade Flows:

A rise in the volume and value of trade flows

An emerging pattern of trade: Vertical Specialisation

• Vertical Specialisation and the crisis: a sharper

decline in world trade flows than in GDP

A statistical effect

The Synchronisation of the drop in trade flows

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STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Objectives and Outline

3

• Objectives: documenting Vertical Specialisation

At country Level

Industry Level

Tendencies

• Outline:

Measuring Vertical Specialisation

Describe main findings

Next Steps

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Measuring Vertical

Specialisation

4

Intermediate Goods

Final Good

Domestic

Intermediate

Inputs

Capital and

Labour

Domestic

Sales

Exports

Source: HIY (2001)

Country 1

Country 2

Country 3

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Measuring Vertical

Specialisation

• A Good is produced in two or more sequential

stages

• At least two countries provide value-added

• At least one country uses imported inputs in its

stage of the production sequence

• Some of the output is exported

Measures the foreign content of exports

5

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Limitations

• Level of aggregation

• Measuring Global Value Chains through

Vertical Specialisation

The first stage of the vertical chain

Identifying the actors shaping Global Value Chains

• A related concept: trade in intermediate goods

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STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Data

• Input-Output Tables

Imported inputs used in domestic production

Gross output

Exports

• Years: 1995, 2000, 2005

• Country Coverage:

7

- OECD exc. Iceland

- Estonia

- Israel

- Russia

- Slovenia

- Brazil

- China

- India

- Indonesia

- South Africa

- Argentina

- Chinese Taipei

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Main Findings: Country-Level

• Wide variation of Vertical Specialisation across

countries

• Small economies have higher VS shares

• Country level VS increased in the period 1995-

2005 except in Belgium, Canada and the United

Kingdom

• Most of VS growth occurred between 1995 and

2000

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STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Main Findings: Industry-level

• Wide variation of Vertical Specialisation across

industries (within countries)

• Wide variation of VS across countries (within

industries)

• Higher VS shares in manufacture than in

services

• Some countries have high VS in services: water

transport (e.g. Denmark, Korea, Israel) and

finance and insurance services (e.g.

Luxembourg)

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STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

10

STD/PASS/TAGS – Trade and Globalisation Statistics

Countries with the Highest Level of

VS Shares: 1995-2005

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STD/PASS/TAGS – Trade and Globalisation Statistics

Largest Changes in Country VS

shares 1995-2005

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Country 1995 2000 2005 % increase

Japan 9.44 10.76 16.97 79.66

Greece 15.75 28.30 28.11 78.45

China 16.39 22.04 28.25 72.42

Poland 16.80 25.00 28.73 71.05

Luxembourg 41.36 57.75 60.54 46.38

Country 1995 2000 2005 % decrease

UK 22.52 20.52 18.69 -16.98

Canada 31.48 30.84 27.25 -13.45

Belgium 41.01 46.16 40.42 -1.44

Top 5 increases:

Negative growth rates:

STD/PASS/TAGS – Trade and Globalisation Statistics

Sectors with the Highest Average

Level of Vertical Specialisation

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STD/PASS/TAGS – Trade and Globalisation Statistics

Industry-country Pairs with the Highest

Level of Vertical Specialisation (%)

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0 20 40 60 80 100

Radio, TV & communication eq. (EST)

Office, acc. & computing mach. (HUN)

Manufacturing nec (ISR)

Office, acc. & computing mach. (IRL)

Radio, TV & communication eq. (HUN)

1995

0 20 40 60 80 100

Radio, TV & communication eq. (EST)

Office, acc. & computing mach. (CZE)

Radio, TV & communication eq. (HUN)

Office, acc. & computing mach. (IRL)

Office, acc. & computing mach. (HUN)

2005

VS (%)

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Largest Changes in VS Levels in

Country-Industry Pairs

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Country Sector 1995 2000 2005

India Building and repairing of ships and boats 8.85 15.91 46.03

India Office, accounting and computing machinery 6.48 18.26 27.90

Greece Building and repairing of ships and boats 10.94 17.81 27.27

Japan Radio, TV and communication equipment 8.66 11.64 21.50

India Wood and products of wood and cork 3.51 6.78 8.60

Country Sector 1995 2000 2005

Indonesia Medical, precision and optical instruments 57.8 26.79 27.12

Greece Medical, precision and optical instruments 32.47 29.58 18.84

Indonesia Non-ferrous metals 22.93 19.46 13.39

Greece Radio, TV and communication equipment 32.72 26.97 19.18

Indonesia Manufacturing n.e.c. 31.60 21.51 18.89

Top 5 increases:

Top 5 decreases:

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

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Thank you!