This project is funded by the European Commission, Research Directorate General as part
of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities.
Grant Agreement no: 225 281
Measuring Global Value Chains with
the WIOD
(World Input-Output Database)
Marcel Timmer
Groningen Growth and Development Centre
Universityy of Groningen
g
(presentation at OECD conference,
Paris, 21 September, 2010)
Ways to measure GVCs
¾Case study
¾Firm-level surveyy data
¾International trade data
¾Input-output
¾Input
output tables, various initiatives
¾OECD
¾IDE JETRO
¾IDE-JETRO
¾GTAP
¾WIOD (World Input-Output
Input Output Database)
Documentation and info
ƒ Dedicated website to WIOD project at www.wiod.org
www wiod org
ƒ This presentation based on paper:
World Input-Output Database (WIOD):
Construction, Challenges and Applications
Prepared by
Abdul Azeez Erumban
Reitze Gouma
Bart Los
Robert
obe t Stehrer
Ste e
Umed Temurshoev
Marcel Timmer
Gaaitzen de Vries
Aim of WIOD
ƒ Time-series of input-output tables with supply broken down by
origin: domestically produced or imported (by partner country)
ƒ Satellite accounts:
ƒ Socio-economic
Socio economic (labour and capital input by type)
ƒ Environmental (energy, emissions to air and water, natural
resources))
ƒ Period from 1995 to 2006:
ƒ 27 EU countries and 13 other major countries
ƒ 35 industries and 59 products
List of Countries
• EU-27
non EU:
• plus13 non-EU:
- Canada
- United States
- Brazil
- Mexico
- Turkey
- Russia
- China
- India
- Japan
- South Korea
- Taiwan
- Indonesia
- Australia
National Input-Output (IO) Table
Industry
y
(industry by industry type)
Rest of World
Total
Industry
Final use
Total
Intermediate use
Domestic
Exports
Final use
Total
Use
Value added
Output
Imports
Total supply
World input-output table
(3 regions
regions, industry-by-industry
industry by industry type)
Country A
Country B
Intermediate
use
Intermediate
use
Intermediate
use
Industry
Industry
Industry
Final
domestic
use
Final
domestic
use
Final
domestic
use
Total
Industry
Rest of World
(RoW)
Rest of World
Intermediate
use of
domestic
output
Intermediate Intermediate
Final use by
Final use of Final use by
use by B of use by RoW of
RoW of
Output
domestic B of exports
imports from imports from
exports from
in A
output
from A
A
A
A
Industry
Country B
Country B
Intermediate
use by A of
imports from
B
Final use by
Intermediate Intermediate
Final use by Final use of
Output
use by RoW of
RoW of
use of
A of exports domestic
in B
imports from
exports from
domestic
from B
output
p
B
B
output
Industry
Country A
Country A
Rest of
World
Intermediate
use by A of
imports from
RoW
Intermediate
use by B of
imports from
RoW
Value added
Output in A
Value added Value added
Output in B Output in RoW
Intermediate
Final use by Final use by Final use of
use of
A of exports B of exports domestic
domestic
from RoW
from RoW
output
output
Output
in RoW
WIOD: What
What’s
s new?
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Time-series
Time
series benchmarked on National Accounts data
National supply and use tables as the basis
Linked with bilateral international trade data
Including trade in services
Improved allocation of imports to use category (BEC-like)
Socio-economic satellite accounts (labour by skill; capital by type)
Constant price tables
(B
(Based
d on official
ffi i l statistics
t ti ti with
ith maximum
i
off ttransparency iin
calculations)
Dataflows and construction steps in WIOT
Public
statistics
For each
country
International trade
statistics
(time-series)
National accounts
(time-series)
Supply and use tables
(infrequent)
Total Final demand by
y type
yp
Total Export/Import
Value added by industry
Gross output by industry
Supply
pp y (Basic
(
price)
p
)
Use (Purchasers' price)
Imports
p
and exports
p
on bilateral basis
- of goods
- of services
Supply (Basic price)
Use (Basic price)
Valuation matrix
Bilateral import
shares by use
Harmonisation
Estimation
Time series
for each
country
Estimation
Time series
for each
country
Supply
S
l (Basic
(B i price)
i )
Valuation matrix
Domestic use (Basic price)
Import use (Basic price) by
delivering country
Estimation
Time series
World input-output tables
Methodologies
g
1. Time-series of SUTs at p
purchasers’ prices
p
¾ Extrapolation and benchmarking of SUTs to National Accounts
statistics, based on SUT-RAS method (Temurshoev and Timmer
2009)
2. From SUTs at purchasers’ prices to basic prices
¾ Construction of net tax, trade and transport margin matrices
3. From national to inter-country SUTs
¾ Breakdown of Use table into domestic and imported (by delivering
y)
country)
¾ Relying on imports from international trade statistics
¾ Not simple proportional method, but distinction between
intermediate consumer and capital goods
intermediate,
goods. This is based on a
new classification of HS6-digit products to end-use
¾ (In later stage use import tables from NSIs if available)
Methodologies
g
4. From SUTs to inter-country input-output table
¾ Technology assumptions (on product sales or production)
p
to RoW is calculated as residual and can
¾ Rest of World: exports
become negative
5 From current price to constant price tables
5.
¾ National deflators based on industry gross output deflators, and
row wise deflation of SUT. At later stage add in more information
from national accounts
¾ International deflators (PPPs): World Bank ICP expenditure
PPPs adjusted and allocated to industries (for 2005)
The iPod example
(Linden, Dedrick & Kraemer, 2009 )
Linden Dedrick & Kraemer 2009 )
Stylised I-Pod value chain
Japan
Hard drive
Consumer
USA
Retail
CHINA
Assembly
Korea
Memory
USA
Processors
USA
Apple
Others
Battery
I-Pod value chain (in $)
Consumer
Retail price
Factory price
299
150
Japan
Hard drive
96
USA
Retaill
CHINA
Assembly
bl
69
5
USA
Apple
80
Korea
Memory
3
USA
Processors
13
Others
Battery
33
Breakdown of iPod $299
retail price
Distribution and
reital, $69.00
Japan, $96.00
Apple, $80.00
Korea, $2.50
Other, $33.00
China,
C
a, $5.00
USA $13
USA,
$13.50
50
Some lessons
¾ I-pod
I d iis end-result
d
lt off fragmented
f
t d value
l chain
h i
¾ Made in China does not mean that China captures most of the
value. Japan and US do.
¾ Assembly taking place in China by low-skilled workers at low
wages adds little value to the product
¾ Export statistics might be misleading ($150 from China to US). It
is the value added content of trade that counts (only $5).
¾ BUT How to generalise this (and other) case
case-studies?
studies?
¾ Firm-level data with information where intermediate inputs are
being sourced is scarce.
¾ Value chains are complex!
Value chain in value chain
Japan
Hard drive
Hard drive
CHINA
I‐pod
Assembly
Korea
Memory
USA
Processors
Others
Battery
CHINA
HDD
Assembly
CHINA
Japan
Philippines
Others
WIOD approach to global
value
l chain
h i analysis
l i
¾ Using
U i industry
i d t d
data
t from
f
National
N ti
l St
Statistical
ti ti l IInstitutes
tit t (NSI
(NSIs)) that
th t
is collected and made consistent within the framework of the
National Accounts
¾ Relying on input-output techniques to measure the direct and
p
into p
production
indirect inputs
¾ Decompose contribution of each country to value chains into
value added by factor inputs:
¾ various types of labour (low-, medium-, and high-skilled)
¾ Physical capital.
¾ Provide trends over time
Factor content
measurement
number of countries ((C),
), industries ((N)) and factors ((F))
B = (direct) factor inputs per unit of gross output (FC x NC)
(I-A)-1 = Leontief inverse of world IO table (NC x NC)
The factor inputs required per unit of final demand (both direct and indirect):
B* = B (I-A)
(I A)-1
B* = factor inputs per unit of final demand (FC x NC)
B* contains coefficients. The amounts of factor inputs that can be attributed
to observed levels of final demand can be found by
K=B* D
in which D is an NC*NC diagonal matrix with final demand levels and K is
the FC*NC matrix of amounts of factor inputs attributed to each of the NC
final demand levels.
levels
Example of Inputoutput relations
GERMANY
REST OF WORLD
Final consum.
Final consum.
Car manufact.
All sectors
Other sectors
Global Value Chain of Final Output from
German transport equipment manufacturing (1995 )
100
80
USA
KOR
JPN
CHN
ROW
Other EU
USA
¾Total final expenditure
(domestic
KOR
JPN
CHN
and foreign) on output from
ROW
German automotive industry
( sales)
(≤
l )
Shares (%
%)
Other EU
¾German share is partly due to
f t inputs
factor
i
t deployed
d l
d iin
automotive industry
60
40
DEU
20
0
1995
¾But also in other German
industries thatDEU
deliver intermediate
inputs to automotive industry
¾Foreign countries capture share
due to delivery of intermediate
inputs (direct 2006
or indirect)
¾Nationality is based on location of
production factors,, not ownership
p
p
Global Value Chain of Final Output from
German transport equipment manufacturing (1995 and 2006)
100
80
USA
KOR
JPN
CHN
ROW
USA
KOR
JPN
CHN
ROW
Other EU
Shares
s (%)
Other EU
60
40
DEU
DEU
20
0
1995
2006
Global Value Chain of Final Output from
German transport equipment manufacturing (1995 and 2006)
100
ROW High skill labour
ROW High skill labour
ROW Med skill labour
ROW Med skill labour
ROW Low skill labour
80
ROW NIT Capital
ROW Low skill labour
ROW IT Capital
O
Own
High
Hi h skill
kill labour
l b
ROW NIT Capital
Share
es (%)
ROW IT Capital
60
Own High skill labour
Own Medium skill labour
40
Own Medium skill labour
Own Low skill labour
Own Low skill labour
20
0
Own NIT Capital
Own NIT Capital
Own IT Capital
Own IT Capital
1995
2006
Global Value Chain of Final Output from
transport equipment manufacturing (Germany, China, Japan and USA 2006)
100
ROW High skill labour
ROW High skill labour
ROW Med skill labour
80
ROW Med skill labour
ROW Low skill labour
ROW Low skill labour
ROW Capital
ROW Capital
Own High
g skill labour
Share
es (%)
Own Medium skill labour
60
ROW High skill labour
ROW Med skill labour
ROW Low skill labour
ROW High skill labour
ROW Med skill labour
ROW Low skill labour
ROW Capital
ROW Capital
Own High skill labour
Own High skill labour
Own High skill labour
Own Medium skill labour
Own Low skill labour
40
Own Medium skill labour
20
Own Low skill labour
Own Medium skill labour
Own Low skill labour
Own Low skill labour
Own Capital
Own Capital
Own Capital
O
Own
Capital
C it l
0
DEU
CHI
USA
JAP
Global Value Chain of Final Output from
Global transport equipment manufacturing (1995 and 2006)
100
JPN
JPN
80
USA
USA
Share
es (%)
DEU
60
KOR
DEU
KOR
40
Other EU
Other EU
ROW
20
ROW
CHN
0
CHN
1995
2006
Global Value Chain of Final Output from
Global transport equipment manufacturing (1995 and 2006)
100
Low skill labour
Low skill labour
80
Medium skill labour
Shares
s (%)
Medium skill labour
60
High skill labour
40
High skill labour
20
NIT Capital
0
NIT Capital
IT Capital
IT Capital
1995
2006
Global Value Chain of Final Output from
Global textile manufacturing (1995 and 2006)
100
Other EU
Other EU
USA
80
Share
es (%)
USA
60
KOR
JPN
DEU
KOR
JPN
ROW
DEU
40
ROW
20
CHN
CHN
0
1995
2006
Global Value Chain of Final Output from
Global textile manufacturing (1995 and 2006)
100
OECD Other
80
OECD Other
Shares
s (%)
OECD Low skill labour
ROW Capital
60
OECD Low skill labour
40
ROW Other labour
ROW Capital
ROW Low skill labour
ROW Other labour
CHN Capital
20
0
ROW Low skill labour
CHN Other labour
CHN Capital
CHN Other labour
CHN Low skill labour
CHN Low skill labour
1995
2006
Issues on the table
¾ Global value chain is in nominal value ($)
($). Changes
g can be due
to changes in factor prices and changes in factor quantities. E.g.
in German automotive case:
¾ Is the wage
g of German medium-skilled workers relative to other
German (and foreign) workers squeezed?
¾ Or is their employment going down?
¾ We have the p
price data to make the breakdown
¾ Ownership versus location:
¾ Who owns the returns on capital? Disconnect in case of foreign
ownership
¾ Less of an issue for labour compensation
¾ Capital compensation is partly payment for investment made in
the past
past. E
E.g.
g Chinese textile makers buy Japanese machinery
machinery.
In dynamic models we can trace this.
¾ Decomposition techniques are silent on causality
Factor content of net exports, China (1995 and 2006)
300,000
1995
259,888
2006
250,000
200,000
Millio
ons of US$
150,000
100,000
67,828
49,465
50,000
,
0
5,943
Capital
50 000
-50,000
-100,000
Low skill
Medium skill
-29,412
-7,106
High skill
-20,957
-86,224
-150,000
Factor content of net exports is defined as factors needed to satisfy
domestic final demand minus available factors
Factor content of net exports, China (1995 and 2006)
160,000
300,000
1995
259,888
2006
143 464
143,464
140,000
250,000
Millions of US$
$
Millions of US$
$
100,000
67,828
49,465
50,000
5,943
Capital
Low skill
-50,000
-150,000
Medium skill
-29,412
29 412
80 000
80,000
40,000
23,539
21,763
20,000
-7,106
High skill
-20,957
0
-86,224
-20,000
China
Capital
-3,730
Low skill
Medium skill
Germany
Factor content of net exports, USA (1995 and 2006)
0
Capital
80,244
-50,000
60,000
31,625
30,130
22,888
19,261
20,000
-3,571
Medium-18,946
skill
-3,315
High skill
-21,817
-52
52,929
929
-100,000
48,493
Low skill
-22,342
-95,932
-150,000
Millions of US$
80,000
High skill
-10,620
-13,091
-20,567
-40,000
100,000
Millions of US$
71,217
60,000
Factor content of net exports, Japan (1995 and 2006)
40,000
2006
100,000
150,000
-100,000
1995
120,000
200,000
0
Factor content of net exports, Germany (1995 and
2006)
-200,000
0
-20,000
Capital
Low skill
Medium skill
High skill
-16,354
-300,000
-40,000
-350,000
-60,000
-80,000
-100,000
-250,000
-73,679
Japan
1995
2006
1995
-400,000
-414,116
-450,000
USA
2006
Environmental
applications
li ti
¾ Environmental
E i
l satellite
lli accounts:
¾
¾
¾
¾
Energy use
Greenhouse g
gases ((CO2 and others),
)
Ozone depleting gases
Acidifying emissions to air
¾ Same input-output technique as for global value chain
analysis. Now e.g. emissions per unit of gross output is
used.
¾ Carbon
C b ffootprint
t i t off a country:
t CO2 emitted
itt d globally
l b ll in
i
production to satisfy domestic final demand
¾ Carbon footprint minus available factors is emissions embodied
in net trade
Embodied CO2 emissions of final German domestic demand
(1995 and 2006)
1,200,000
Emissions (k
E
kt CO2)
1,000,000
ROW
ROW
800,000
600,000
GER
400,000
200,000
0
GER
RUS
Jap
RUS
Jap
Chin
Chin
rest EU
rest EU
US
US
1995
2006
Emissions embodied in net trade
(China, Germany, US and Japan in 1995 and 2006)
2,000,000
1995
2006
1,566,311
Emissions (
(kt CO2)
1,600,000
1,200,000
800,000
599,100
400 000
400,000
0
Germany
-202,041 -214,626
-400,000
Japan
-303,564 -309,283
United States
-359,133
-800,000
-1,200,000
-1,044,829
China
Future work
¾ Data
D t improvements
i
t
¾ Testing
g by
y users (p
(parts p
public autumn 2011;; full May
y 2012))
¾ Provide further analysis
¾ Decomposition
D
iti off changes
h
iin global
l b l value
l chains
h i iinto
t
changes in technology and changes in demand
¾ Similarly for pollution indicators (C02 plus other GHG)
¾ Link to timing of WTO ascension and Kyoto-protocol
participation
¾ Bring
g in dynamic
y
IO-models ((investment))
¾ Testing Heckscher-Ohlin-Samuelson theory
Future work
¾ Data
D t improvements
i
t
¾ Improving bilateral trade in services
¾ Constant price series
¾ National
N ti
ld
deflators
fl t
¾ Purchasing power parities for output and intermediate inputs
¾ Volume masures of labour and capital
¾ Improving factor input data for non
non-OECD
OECD countries (as part of work by
World KLEMS consortium)
¾ Comparing our use-classification of trade flows with official import IO tables.
g export
p trade tables for Mexico and China
¾ Processing
¾ Testing by users (parts public autumn 2011; full May 2012)
¾ Provide further analysis !
Additional material
Who is in WIOD?
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
University of Groningen (The Netherlands)
Institute for Prospective Technological Studies (Spain)
Wiener Institut für Internationale Wirtschaftsvergleiche
g
((Austria))
Zentrum für Europäische Wirtschaftsforschung (Germany)
Österreichisches Institut für Wirtschaftsforschung (Austria)
Konstanz University of Applied Sciences (Germany)
The Conference Board Europe (Belgium)
C
CPB
Netherlands Bureau ffor Economic Policy Analysis
Institute of Communication and Computer Systems (Greece)
Central Recherche SA (France)
OECD (France)
Columns in USE Table
Code
NACE
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
AtB
C
15t16
17t18
19
20
21t22
23
24
25
26
27t28
29
30t33
34t35
36t37
E
F
50
51
52
H
60
61
62
63
64
J
70
71t74
L
M
N
O
P
Description
Agriculture, Hunting, Forestry and Fishing
Mining and Quarrying
Food, Beverages and Tobacco
Textiles and Textile Products
Leather, Leather and Footwear
Wood and Products of Wood and Cork
Pulp, Paper, Paper , Printing and Publishing
Coke, Refined Petroleum and Nuclear Fuel
Chemicals and Chemical Products
Rubber and Plastics
Other Non-Metallic
Non Metallic Mineral
Basic Metals and Fabricated Metal
Machinery, Nec
Electrical and Optical Equipment
Transport Equipment
Manufacturing, Nec; Recycling
Electricity,
y, Gas and Water Supply
pp y
Construction
Sale, Maintenance and Repair of Motor Vehicles Retail Sale of Fuel
Wholesale Trade and Commission Trade, Except of Motor Vehicles
Retail Trade, Except of Motor Vehicles ; Repair of Household Goods
Hotels and Restaurants
Inland Transport
Water Transport
Air Transport
Other Supporting and Auxiliary Transport Activities; Activities of Travel Agencies
Post and Telecommunications
Financial Intermediation
Real Estate Activities
Renting of M&Eq and Other Business Activities
Public Admin and Defence; Compulsory Social Security
Education
Health and Social Work
Other Community, Social and Personal Services
Private Households with Employed Persons
Financial intermediation services indirectly
y measured (FISIM)
(
)
Total
Final consumption expenditure by households
Final consumption exp. by non-profit organisations serving households
Final consumption expenditure by government
Final consumption expenditure
Gross fixed capital formation
Changes in inventories and valuables
Gross capital formation
Exports
Final uses at purchasers' prices
Total use at purchasers' prices
Columns
in Use
t bl
table
Description
Code
CPA
1
1
Products of agriculture, hunting and related services
2
2
Products of forestry, logging and related services
3
5
gp
products;; services incidental of fishing
g
Fish and other fishing
4
10
Coal and lignite; peat
5
11
Crude petroleum and natural gas; services incidental to oil and gas extraction excluding su
6
12
Uranium and thorium ores
7
13
Metal ores
8
14
g and q
quarrying
y gp
products
Other mining
9
15
Food products and beverages
10
16
Tobacco products
11
17
Textiles
12
18
Wearing apparel; furs
13
19
products
Leather and leather p
14
20
Wood and products of wood and cork (except furniture); articles of straw and plaiting mate
15
21
Pulp, paper and paper products
16
22
Printed matter and recorded media
17
23
Coke, refined petroleum products and nuclear fuels
18
24
Chemicals, chemical products and man-made
man made fibres
19
25
Rubber and plastic products
20
26
Other non-metallic mineral products
21
27
Basic metals
22
28
Fabricated metal products, except machinery and equipment
23
29
Machinery and equipment n.e.c.
24
30
Office machinery and computers
25
31
Electrical machinery and apparatus n.e.c.
26
32
Radio, television and communication equipment and apparatus
27
33
Medical, precision and optical instruments, watches and clocks
28
34
Motor vehicles,
vehicles trailers and semi
semi-trailers
trailers
29
35
Other transport equipment
30
36
Furniture; other manufactured goods n.e.c.
31
37
Secondary raw materials
32
40
Electrical energy, gas, steam and hot water
33
41
Collected and purified water
water, distribution services of water
34
45
Construction work
Rows in
Use
table
(part 1)
35
50
Trade, maintenance and repair services of motor vehicles and motorcycles; retail sale of a
36
51
Wholesale trade and commission trade services, except of motor vehicles and motorcycle
37
52
Retail trade services, except of motor vehicles and motorcycles; repair services of person
38
55
H t l and
Hotel
d restaurant
t
t services
i
39
60
Land transport; transport via pipeline services
40
61
Water transport services
41
62
Air transport services
42
63
Supporting and auxiliary transport services; travel agency services
43
64
Post and telecommunication services
44
65
Financial intermediation services, except insurance and pension funding services
45
66
Insurance and pension funding services, except compulsory social security services
46
67
Services auxiliary to financial intermediation
47
70
Real estate services
48
71
Renting services of machinery and equipment without operator and of personal and house
49
72
Computer and related services
50
73
Research and development services
51
74
Other business services
52
75
Public administration and defence services; compulsory social security services
53
80
Education services
54
85
Health and social work services
55
90
Sewage and refuse disposal services, sanitation and similar services
56
91
Membership organisation services n.e.c.
57
92
Recreational, cultural and sporting services
58
93
Other services
59
95
Private households with employed persons
60
Total
61
Cif/ fob adjustments on exports
62
Direct purchases abroad by residents
63
Purchases on the domestic territory by non-residents
64
Total intermediate consumption/final use at purchasers' prices
65
Compensation of employees
66
Other net taxes on production
67
Operating surplus
surplus, gross
68
Value added at basic prices
69
Output at basic prices
Rows in
Use
table
(part 2)