The spread of global value chains (GVCs) has given rise to new statistical tools, the Inter-Country Input-Output tables and new analytical frameworks aimed at properly identifying production linkages between and within economies. However, several important questions remain unaddressed. This paper proposes a new toolkit for value-added accounting of trade flows at the aggregate, bilateral, and sectoral levels that can be used to investigate a broad set of empirical questions-including an assessment of the share of trade related to GVCs. The paper shows how different empirical issues require distinct accounting perspectives, and maps these methodologies onto the economic questions they are best suited to address. In this way, in addition to providing novel tools, the paper brings a large part of the related literature under one comprehensive framework. the WDR 2020 team for their insightful comments. The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Bank of Italy. The usual disclaimer applies.
The diffusion of international production networks has challenged the capability of traditional trade statistics to provide an adequate representation of supply and demand linkages among the economies. To address this issue, new statistical tools (the Inter-Country Input-Output tables) and new analytical frameworks have been developed. Koopman, Wang and Wei propose an accounting methodology to decompose a country's total gross exports by source and final destination of their embedded value added. We develop this approach further by deriving a fully consistent counterpart for bilateral trade flows, refining the original framework. Along with other contributions, our methodology completes the bridge between traditional trade statistics and the systems of national accounts and provides new tools for investigating global value chains. Here we present two empirical applications of two different versions of our decomposition of bilateral trade flows: one explores the forward linkages of Italian exports; the second derives a measure of the share of value-chainrelated trade and assesses how its evolution since the mid-1990s has affected the relationship between world trade and income.
Both empirical and theoretical literature show that multinational firms exhibit a competitive advantage before investing abroad. However, there are no clear empirical results regarding the ex post effects of foreign direct investment (FDI) on firm performance, partially due to the inadequacy of available firmlevel data. We build a brand new firm-level dataset able both to represent the extent of Italian firms' foreign activity and to provide reliable measures of key performance indicators, especially total factor productivity (TFP) and employment. We then use a propensity score matching procedure to analyze the causal relationship between FDI and firm performance. Firms investing abroad for the very first time, especially in advanced economies, show higher productivity and employment dynamics in the years following the investment: the average positive effect on TFP is driven by new multinationals operating in specialized and high-tech sectors, while the positive employment gains are explained by an increase of the white collar component. On average there are no negative effects on the parent firm's blue collar component. the participants at the Italian Trade Study Group conference in Cagliari for the insightful comments.Electronic supplementary material The online version of this article (
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