Trade in Intermediate Goods
and Services
Rainer Lanz, Sébastien Miroudot, Alexandros Ragoussis
Trade Policy Linkages and Services Division
OECD Trade and Agriculture Directorate
WPTGS, 18 November 2009
Trade and activities of multinational enterprises:
Programme of work of the OECD Trade Committee
•
“Vertical Trade, Trade Costs and FDI”
(TAD/TC/WP(2008)23/FINAL)
•
“Trade in Intermediate Goods and Services”
(TAD/TC/WP(2009)1/FINAL)
•
•
Next year:
–
Intra-firm trade and investment
–
Trade in tasks
Next Programme of Work and Budget (2011-2012): analysis of
trade flows in value-added?
OECD Trade & Agriculture
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Trade in intermediate goods and services
•
Objectives of the study:
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To assess trade flows of intermediate goods and services among
OECD countries and with their main trade partners
–
To analyse the determinants of trade in intermediate inputs
–
To look at the relationship between productivity and trade in
intermediates at the industry level
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Intermediate goods in trade data
•
OECD International Trade by Commodity Statistics (ITCS)
database
•
UN Broad Economic Categories (BEC) classification
–
•
Based on the Standard International Trade Classification (SITC Rev. 3)
Grouping of commodities according to main end use:
–
capital goods
–
intermediate goods
–
consumption goods
–
not classified (motor spirit, passenger motor cars, goods n.e.s.)
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Input-Output (I-O) Tables
•
I-O tables present in matrix format the supply side and
the demand side of an economy
•
•
OECD I-O database 2009 edition
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39 countries, 48 industries (aggregated to 29)
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Year coverage: 1995, 2000 and 2005 (ideally)
Identification of both the industry of origin and using
industry
1. Allows distributing bilateral trade over using industries k
2. Estimation of bilateral imports of intermediate services
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Combining trade data with I-O tables
•
Imports of intermediate inputs p from country j by
industry k in country i:
I ijpkt   ipkt mijpt
•
mijpt – bilateral imports of inputs p ( BEC trade data)
•
αipkt - share of imported inputs p used by industry k ( I-O
tables)
•
Five dimensions: importer i, exporter j, industry of origin p,
using industry k and year t
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Share of intermediate to total trade
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Intermediate to total trade - Goods
Intermediate to total trade - Services
1. Intermediate goods and services dominate trade flows
2. Share in total trade has remained fairly constant over time
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Intra- and inter-regional imports of intermediate
goods (Billion USD, 2006)
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Share of regions in world intermediate goods
imports (2006)
Food products
1.0
Electricity, gas and water
Textiles and wearing apparel
0.9
0.8
Other manufacturing
Wood,publishing and printing
0.7
0.6
0.5
0.4
Other transport equipments
Refined petroleum & other
treatments
0.3
0.2
0.1
0.0
Motor vehicles
Chemical products
Medical, precision and optical
instruments, watches and clocks
Rubber and plastic products
Radio,TV,communication
equipments
Metal products
Office machinery and computers
Asia
Mechanical products
Europe (excluding intra-EU trade)
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North America
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Econometric analysis
Gravity regressions
•
•
In comparison to imports for final consumption, imports of
intermediates are
–
more sensitive to trade costs
–
less attracted by bilateral market size
The activity of multinational enterprises impacts positively
imports of intermediate inputs
Production function regressions
•
A higher use of foreign inputs increases the productivity
of domestic industries
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Main policy conclusions of the analysis
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Trade in intermediates is more sensitive to trade
barriers.
–
Policies aiming at fully benefiting from international production
networks should reach a higher degree of trade liberalisation.
But tariff escalation should be avoided.
•
Trade in intermediates has an important regional
dimension.
•
Trade in intermediates depends less on the size of the
market and on the "home bias" of consumers.
–
This represents a chance for emerging economies and small
economies that can specialise in the production of inputs.
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Thank you for your attention!
sebastien.miroudot@oecd.org
OECD Trade & Agriculture
rainer.lanz@oecd.org
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