Measurement and Determinants of Trade in Value Added

Contribution of Trade Facilitation Measures to the Operation of Supply Chains

“…Several quantitative approaches such as Choi (2013) and Nakazawa et al (2014) confirm strong gravity relationships when using value-added trade flows. However, two drawbacks of using the gravity framework approach need to be accounted for.…”

“…Baldwin and Taglioni, 2012;Brooks and Ferrarini, 2012;Cheng and Fukomoto, 2010;Noguera, 2012;Guillhoto, 2013;Choi, 2013;Nakazawa et al, 2014;Achard et al, 2014), but there is no empirical "gold standard" for investigating determinants of trade in value-added. Many of the most recent empirical studies employ the gravity model of trade by including the recently-developed estimates of value-added or trade in intermediates as a dependent variable (these are reviewed in Annex 1).…”

“…Authors find that trade policy variables (applied tariffs and joint adherence to a preferential trade agreements) play a significant role in facilitating the intensity of production sharing and vertical trade. A very recent stream of gravity model literature (Cheng and Fukumoto, 2010;Noguera, 2012;Choi, 2013) studies determinants of trade in value added directly. Cheng and Fukumoto (2010) analyse in parallel the determinants to gross trade and the determinants of the domestic value added of exports.…”

“…Noguera (2012) applies this equation to data for 42 countries (covering the OECD plus many emerging markets) and a composite rest of the world region from 1970 to 2009; four composite sectors are considered: (1) agriculture, hunting, forestry and fishing; (2) non-manufacturing industrial production; (3) manufacturing; (4) services. Choi (2013) investigates the determinants of trade in value added, by incorporating it into the framework of the gravity model. The trade in value added data (expressed as domestic value added embodied in foreign final demand) is used as dependent variable and regressed against variables as GDP, distance, contiguity, common language, colony, as well as the relative capital/labour ratio, highand low-skilled technological differences in order to test the fit to Heckscher-Ohlin (HO) and Ricardo models.…”

What drives the differences in domestic value added in exports between old and new E.U. member states?

“…Further, the existing empirical studies largely focus on evaluating the determinants that may facilitate the establishment of supply links, namely those: influencing foreign value added (F.V.A.) in exports (Rahman & Zhao, 2013;Stehrer & Stöllinger, 2015), of participation in G.V.C.s (Kowalski et al, 2015;Stehrer & Stöllinger, 2015;Van der Marel, 2015) and of trade in value added (Baldwin & Taglioni, 2011;Brooks & Ferrarini, 2012;Cheng & Fukumoto, 2010;Choi, 2013;Noguera, 2012).…”