The Measurement of Globalisation using International Input-Output Tables

One of the distinctive characteristics of the current globalisation process is the emergence of global value chains. Within global value chains and international production networks, not only are final goods traded internationally, but intermediate goods (parts and components) and, in recent years, services also increasingly are. This trend significantly alters the economic relations between countries and increasingly casts doubt on empirical indicators such as trade and FDI that are traditionally used to measure globalisation. Input-output tables may provide much finer detail in describing current globalisation as they offer information on the use of goods instead of the rather arbitrary classification schemes that divide goods into intermediate and other categories. Moreover, input-output tables also incorporate information on the use of services, enabling measurement of the increasing offshoring of service activities in today's business activities. Based on the OECD Input-Output Database, which includes harmonised tables for 38 countries (of which 10 emerging non-OECD economies), this paper brings together empirical evidence on the growing importance of global value chains and the increasing interdependence between countries. Input-output indicators are presented for individual countries and individual industries, aiming to demonstrate the changing characteristics of current globalisation.