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Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera, Accounting for Intermediates: Production Sharing and Trade in Value Added

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  • Kuboniwa, Masaaki

Abstract

In light of growing intermediate goods trade, Johnson and Noguera (2012) developed theoretical and empirical research on the new concept of trade in value added in place of gross trade. However, they did not deal with the relationship between the new value added trade balance and the gross trade balance. Presented here is that in the case of two countries and many sectors the new value added trade balance always equals the gross trade balance. We verify this proposition by using an international input-output data compiled by Groningen University. In the case with three countries (China, the USA and the rest of the world; ROW) and many sectors, the China-USA trade balance or the USA-China imbalance measured in value added for 2010 is 23.5% smaller than that in gross terms, whereas the China-ROW trade balance in value added is 94% larger than that in gross terms.

Suggested Citation

  • Kuboniwa, Masaaki, 2014. "Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera, Accounting for Intermediates: Production Sharing and Trade in Value Added," Discussion Paper Series 598, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hituec:598
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/26056/DP598.pdf
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    References listed on IDEAS

    as
    1. Trefler, Daniel & Zhu, Susan Chun, 2010. "The structure of factor content predictions," Journal of International Economics, Elsevier, vol. 82(2), pages 195-207, November.
    2. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
    3. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
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    Cited by:

    1. Kuboniwa, Masaaki, 2014. "Fundamental Theorem on the Relationship between Trade Balances in Value Added and Gross Terms: Amendment," Discussion Paper Series 600, Institute of Economic Research, Hitotsubashi University.
    2. Kuboniwa, Masaaki, 2014. "Bilateral Equivalence between Trade in Value Added and Value Added Content of Trade," Discussion Paper Series 601, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    trade in value added; gross trade; input-output tables; global supply chain;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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