The Role of Brazilian Regions in the Global Value Chain

Abstract

Abstract:In the last couple of decades, production processes have been characterized by their fragmentation, which crosses the borders of countries more and more. This coincides with the common viewpoint that products and services are now made in global value chains and that 'trade in value added' might be a better approach for the measurement for international trade. The same applies at the regional level, and perhaps even to a larger extent. The present paper analyzes the role of Brazilian states in the global value chain. Since fragmentation of production processes leads to an interdependent structure which has to be accounted for, the input-output methodology seems especially suitable. Therefore, in its empirical application, the paper combines a world input-output table covering 40 countries (and the rest of the world as a 41 st country) with an inter-regional input-output table covering each of the Brazilian states, for the year 2008. Our results show that the average country trades approximately twice as much in value added (as a share of country's value added) than Brazil: the participation of Brazil in the global value chain is somewhat limited. We notice, however, important differences among states, both in terms of trade volume and of relevant industries that account for the generation of value added. The paper also further analyzes the Brazilian value chain and the trade relations of Brazilian states with China and USA, exploring the regional heterogeneities involving such relations. Abstract:In the last couple of decades, production processes have been characterized by their fragmentation, which crosses the borders of countries more and more. This coincides with the common viewpoint that products and services are now made in global value chains and that 'trade in value added' might be a better approach for the measurement for international trade.The same applies at the regional level, and perhaps even to a larger extent. The present paper analyzes the role of Brazilian states in the global value chain. Since fragmentation of production processes leads to an interdependent structure which has to be accounted for, the input-output methodology seems especially suitable. Therefore, in its empirical application, the paper combines a world input-output table covering 40 countries (and the rest of the world as a 41 st country) with an inter-regional input-output table covering each of the Brazilian states, for the year 2008. Our results show that the average country trades approximately twice as much in value added (as a share of country's value added) than Brazil: the participation of Brazil in the global value chain is somewhat limited. We notice, however, important differences among states, both in terms of trade volume and of relevant industries that account for the generation of value added. The paper also further analyzes the Brazilian value chain and the trade relations of Brazilian states with China and USA, exploring the regional heterogeneities involving such relations.

EUREGIO: The Construction of a Global IO Database With Regional Detail for Europe for 2000–2010

“…1 The construction of such tables with regional detail is still in its infancy, though. Dietzenbacher et al (2012) included Brazilian regional detail in the World Input-Output Database (WIOD). Cherubini and Los (2012) similarly analyzed four Italian NUTS1 regions.…”

A network approach for assembling and linking input–output models

“…Hence, its figures represent a compromise between different constraints and may therefore not respect data of a particular country (Edens et al, 2015). More generally, if the MRIO is harmonized, there simply might be more detailed national data available, possibly even a subnational MRIO (Dietzenbacher et al, 2013a;Bachmann et al, 2014;Wenz et al, 2014). Figure 4 illustrates a global MRIO of which one particular region was replaced by superior national-level data.…”

Multinational enterprises and global value chains: the OECD analytical AMNE database

“…In this work, the challenge of accounting for heterogeneity among producers or regions within countries has been already emphasised. Some studies have started to integrate regional characteristics into ICIO tables (Dietzenbacher et al, 2013;Los et al, 2017). The OECD ICIO tables account for the heterogeneity among exporting and non-exporting firms for two specific countries -China and Mexico -(in the case of China, exporters are also further split to account for processing exports).…”