Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research

• Published in: The Journal of economic perspectives Vol. 28; no. 2; pp. 119 - 142
• Main Author: Johnson, Robert C.
• Format: Journal Article
• Language: English
• Published: Nashville American Economic Association 01.04.2014
• Subjects: Außenwirtschaftstheorie; Balance of trade; Bilateralism; Comparative analysis; Economic analysis; Economic models; Economic shock; Economic statistics; Economic theory; Emerging markets; Endowment; Expenditures; Export; Exports; GDP; Global economy; Gross Domestic Product; Input output; Input output analysis; Input output models; International; International markets; International trade; Lieferkette; Macroeconomics; Makroökonomik; Manufactured products; Quantitative analysis; Studies; Supply; Supply chains; Symposia: Global Supply Chains; Trade; Trade agreements; Trade policy; Value; Value added; Welt; Wertschöpfung
• ISSN: 0895-3309; 1944-7965
• DOI: 10.1257/jep.28.2.119

Due to the rise of global supply chains, gross exports do not accurately measure the amount of value added exchanged between countries. I highlight five facts about differences between gross and value-added exports. These differences are large and growing over time, currently around 25 percent, and manufacturing trade looks more important, relative to services, in gross than value-added terms. These differences are also heterogenous across countries and bilateral partners, and changing unevenly across countries and partners over time. Taking these differences into account enables researchers to obtain better quantitative answers to important macroeconomic and trade questions. I discuss how the facts inform analysis of the transmission of shocks across countries; the mechanics of trade balance adjustments; the impact of frictions on trade; the role of endowments and comparative advantage; and trade policy.