Agenda Item : 9.5.2. Vertical Specialisation and Global Value Chains OECD Statistics Directorate Sonia.Araujo@oecd.org STD/SES/TAGS; 2 nd WPTGS Meeting 16.-18.11.2009, Paris
2 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
3 Objectives and Outline Objectives: documenting Vertical Specialisation At country Level Industry Level Tendencies Outline: Measuring Vertical Specialisation Describe main findings Next Steps
4 Measuring Vertical Specialisation Country 1 Intermediate Goods Country 2 Domestic Intermediate Inputs Capital and Labour Domestic Sales Final Good Country 3 Exports Source: HIY (2001)
5 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
6 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
Data Input-Output Tables Imported inputs used in domestic production Gross output Exports Years: 1995, 2000, 2005 Country Coverage: - OECD exc. Iceland - Estonia - Israel - Russia - Slovenia - Brazil - China - India - Indonesia - South Africa - Argentina - Chinese Taipei 7
8 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
9 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 Statistics Countries with the Highest Level of VS Shares: 1995-2005 11
STD/PASS/TAGS Trade and Globalisation Statistics Largest Changes in Country VS shares 1995-2005 Top 5 increases: 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 Negative growth rates: 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 12
STD/PASS/TAGS Trade and Globalisation Statistics Sectors with the Highest Average Level of Vertical Specialisation 13
STD/PASS/TAGS Trade and Globalisation Statistics Industry-country Pairs with the Highest Level of Vertical Specialisation (%) 1995 2005 VS (%) Radio, TV & communication eq. (HUN) Office, acc. & computing mach. (IRL) Manufacturing nec (ISR) Office, acc. & computing mach. (HUN) Radio, TV & communication eq. (EST) Office, acc. & computing mach. (HUN) Office, acc. & computing mach. (IRL) Radio, TV & communication eq. (HUN) Office, acc. & computing mach. (CZE) Radio, TV & communication eq. (EST) 0 20 40 60 80 100 0 20 40 60 80 100 14
15 Largest Changes in VS Levels in Country-Industry Pairs Top 5 increases: 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 Top 5 decreases: 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
17 Thank you!