Measuring Trade in Value-Added
OECD National Accounts Working Party Meeting
Paris October 2011
Contact: nadim.ahmad@oecd.org
Trade in Value-Added
• Increasing recognition that gross estimates
of trade may create ‘misleading
perceptions’ (Pascal Lamy), and imperfect
policies in a number of areas, including:
– dealing with bilateral trade imbalances
– dealing with the impact of macro-economic
shocks on supply-chains
– understanding the importance of trade to jobs
• Leading to a call for new metrics that better
respond to these issues.
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The iPod
The Apple iPod = 299$ of Chinese
‘exports’ to US
Distribution of the value added
• 299 US$
– 75$ profit to US (Apple)
– 73$ whls/retail US (Apple)
– 75$ to Japan (Toshiba)
– 60$ 400 parts from Asia
– 15$ 16 parts from the US
– 2$ assembly by China
http://blogs.computerworld.com/node/5724
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Responding to needs
• IO tables provide a means to respond to
these developments by measuring
interconnectedness of trade and trade in
value-added terms.
• A number of initiatives have been launched
using interconnected IO tables ( a world IO
table).
• Including a two-year project of the OECD
(STD/TAD/STI).
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International Collaboration
• Various initiatives pooling resources to identify best
practices for allocation of bilateral trade flows within IO
tables.
• But recognition:
• that a long-term approach is needed to ‘institutionalise’
estimates of trade in value-added.
• And that its international nature requires the involvement
of an international agency or international consortia.
• Formalising collaboration with WTO and IDE-JETRO,
and exploring closers links with USITC.
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Indicator & data sharing with IDEJETRO and WTO in TiVA Project
Common to WTO and the
OECD: publically
available
Shared by OECD
and IDE-JETRO
OECD
only
Value added in trade “headline”
indicator:
• bilateral flows;
• by sector to the degree possible.
Input-Output tables,
methodological
assumptions and bilateral
trade flow data
OECD “analytical” data
on trade in services,
trade by enterprise,
intangibles
and income flows.
What do we know now: Import contents of exports
(2005)
Source: OECD Inter-country inter-industry model (March 2011)
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Import contents of exports
Source: OECD Inter-country I-O model, 2011
8
And globalisation continues apace
• As production processes continue to
become more fragmented and chains
become more interconnected.
• Processing trade increasing in China.
• Driven by technological advancement,
reduced transaction costs and trade policy
reform.
• Reinforcing the need for on-going and
robust estimates
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Work Plan
• Estimates can be produced now, but necessarily
require assumptions relating to BTD IO flows.
• Much of the work over next two years will be in
improving the nature of these assumptions, by:
• Developing improved estimates of BTD by Industry and
End-Use
• Improving BTD by services
• Using firm-level micro data
• Decomposing value-added into ‘labour’ and ‘capital’
flows.
• Contribution of intangibles (R&D and software)
• And investigating the scope to trace property
income flows.
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Chinese High Tech Exports by Ownership
(% of the total)
100%
90%
Others
80%
70%
Foreign wholly owned
companies
60%
Sino-Foreign Joint
Ventures
50%
40%
Chinese State Owned
30%
20%
10%
0%
2002
2003
2004
2005
2006
2007
2008
2009
Tangibles vs. intangibles
Investment in fixed and intangible assets
as a percentage of GDP, 2006
%
Machinery and equipment
Software and databases
R&D and other intellectual property products
Brand equity, firm-specific human capital, organisational capital
30
25
20
15
10
5
0
Source: OECD STI Scoreboard 2011. Data on intangible investment are based on COINVEST [www.coinvest.org.uk] and national estimates by researchers. Data for fixed
investment are OECD calculations based on OECD, Annual National Accounts and EU KLEMS Databases, March 2010.
What can WPNA do?
• Support the initiative and related
developments especially in:
– Bilateral trade flows
– Measurement of IPP investment by industry
– Continue to improve comparability of
employment estimates with value-added.
– More detailed IO tables?
• Breakdowns by Foreign/domestic ownership?
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