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Measurement and Determinants of Trade in Value Added

Author

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  • Choi , Nakgyoon

    (Korea Institute for International Economic Policy)

Abstract

This study measures the trade in value added using the World Input Output Tables and the socio-economic accounts of 40 countries and 35 industries from 1996 to 2009. Specifically, this study analyzes the effects of trade on the value added, based on Meng et al. (2006), WTO and IDE-JETRO (2011), Stehrer (2012), Stehrer et al. (2012). The measurement results indicate that export and import values in value added turned out to be smaller than the values in gross value. However, the trade balance in terms of value added does not necessarily shrink compared to the bilateral trade balance in terms of gross value. This study also investigates the determinants of trade in value added, incorporating the gravity model, the Heckscher-Ohlin model, and the Ricardian model. When we use the data on trade in value added, the explanatory power of the gravity model turned out to be relatively small compared to the pooled data on trade in gross value, but that of the Heckscher-Ohlin model turned out to be stronger while the Ricardian model revealed mixed results. Interestingly in our investigations, the elasticities of the Heckscher-Ohlin as well as the Ricardian parameters have been increasing while that of the gravity model has remained stable during the period 1996-2009. This result implies that trade patterns can be better explained by factor endowment and technological differences during the 2000s compared to the 1990s.

Suggested Citation

  • Choi , Nakgyoon, 2013. "Measurement and Determinants of Trade in Value Added," Working Papers 13-1, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwp:2013_001
    DOI: 10.2139/ssrn.2317706
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    Cited by:

    1. Magdalena Olczyk & Aleksandra Kordalska, 2017. "Gross Exports Versus Value-Added Exports: Determinants and Policy Implications for Manufacturing Sectors in Selected CEE Countries," Eastern European Economics, Taylor & Francis Journals, vol. 55(1), pages 91-109, January.
    2. Biswajit Banerjee & Juraj Zeman, 2020. "Determinants of Global Value Chain Participation: Cross-country Analysis," Working and Discussion Papers WP 1/2020, Research Department, National Bank of Slovakia.
    3. Emmanouil Karakostas, 2022. "The Effects of Protectionism on the Exports of the Trade Partners: A Composite Index," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 15(1), pages 58-70, July.
    4. Abdoulganiour Almame Tinta, 2017. "The determinants of participation in global value chains: The case of ECOWAS," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1389252-138, January.
    5. Gordeev, Dmitriy (Гордеев, Дмитрий) & Idrisova, Vittoria (Идрисова, Виттория) & Kaukin, Andrei (Каукин, Андрей) & Ponomarev, Yuriy (Пономарев, Юрий) & Filicheva, Evgeniya (Филичева, Евгения), 2016. "Analysis of Global Supply Chains in International Trade Patterns [Анализ Глобальных Цепочек В Моделях Международной Торговли]," Working Papers 765, Russian Presidential Academy of National Economy and Public Administration.
    6. Biswajit Banerjee & Juraj Zeman, 2022. "Determinants of global value chain participation: cross-country analysis," Indian Economic Review, Springer, vol. 57(1), pages 59-95, June.
    7. Myoung Shik Choi & Hun Dae Lee, 2021. "The Value-Added Effects of Exchange Rates on Global Trade," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 10, January.
    8. Idrisova, Vittoria (Идрисова, Виттория), 2017. "Determinants of Value-Added Exports: The Role of Import Demand Factors [Детерминанты Экспорта Добавленной Стоимости: Роль Факторов Спроса На Импорт]," Working Papers 051715, Russian Presidential Academy of National Economy and Public Administration.

    More about this item

    Keywords

    Trade In Value Added; Determinants Of Trade In Value Added;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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