Measuring Global Value Chains

Abstract

Recent decades have seen the emergence of global value chains (GVCs), in which production stages for individual goods are broken apart and scattered across countries. Stimulated by these developments, there has been rapid progress in data and methods for measuring GVC linkages. The macro approach to measuring GVCs connects national input–output tables across borders by using bilateral trade data to construct global input–output tables. These tables have been applied to measure trade in value added, the length of and location of producers in GVCs, and price linkages across countries. The micro approach uses firm-level data to document firms’ input sourcing decisions, how import and export participation are linked, and how multinational firms organize their production networks. In this review, I evaluate progress in these two approaches, highlighting points of contact between them and areas that demand further work. I argue that further convergence between these approaches can strengthen both, yielding a more complete empirical portrait of GVCs.

Global Firms

“…As shown in column 1, we find that exporting firms have 128 percent more employment, 172 percent higher shipments, 33 percent higher value added per worker, and 3 percent higher total factor productivity (TFP). 24 All of these differences 24 We measure TFP using the Törnqvist superlative index number of Caves, Christensen, and Diewert (1982). We use log differences to approximate the percentage are statistically significant at conventional critical values.…”

Global value chains, firms, and wage inequality: Evidence from China

“…This paper combined the procedures of Kee and Tang (2016) and Upward et al (2013) to estimate the share of foreign value-added content in exports (FVAR) as the proxy of GVC participation index [Koopman et al (2014)]. In addition, this paper also relates to the studies on GVC length and organization [Fally (2012), Antràs et al (2012), Wang et al (2017), Johnson (2017)].…”

Rising Protectionism and Global Value Chains: Quantifying the General Equilibrium Effects

“…However, they assume that industry-level bilateral final and intermediate trade shares are identical, and that the allocation of imported inputs across sectors is the same as the allocation of domestic inputs. As Johnson (2017) explains, this amounts to applying two proportionality assumptions, one at the border to split final goods and inputs, and another behind the border to allocate inputs across industries.…”