Trade in Value-Added A new perspective of international trade. Satoshi Inomata IDE-JETRO
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1 Trade in Value-Added A new perspective of international trade Satoshi Inomata IDE-JETRO
2
3 Evolution of cross-national production networks in the Asia-US region
4 1985 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA
5 1995 China Indoneisa Japan Korea Malaysia China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA Taiwan Philippines Singapore Thailand USA
6 2000 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA
7 2005 China Indoneisa Japan Korea Malaysia China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA Taiwan Philippines Singapore Thailand USA
8 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA Thailand Singapore Philippines Taiwan Malaysia Korea Japan Indoneisa China 1985 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA Thailand Singapore Philippines Taiwan Malaysia Korea Japan Indoneisa China 1995 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA Thailand Singapore Philippines Taiwan Malaysia Korea Japan Indoneisa China 2000 China Indoneisa Japan Korea Malaysia Taiwan Philippines Singapore Thailand USA USA Thailand Singapore Philippines Taiwan Malaysia Korea Japan Indoneisa China 2005
9
10 I J M S C: China, I: Indonesia, J: Japan, K: Korea, M: Malaysia, N: Taiwan, P: The Philippines, S: Singapore, T: Thailand, U: The USA
11 K T I J M S N C: China, I: Indonesia, J: Japan, K: Korea, M: Malaysia, N: Taiwan, P: The Philippines, S: Singapore, T: Thailand, U: The USA
12 K T I J M S U N C: China, I: Indonesia, J: Japan, K: Korea, M: Malaysia, N: Taiwan, P: The Philippines, S: Singapore, T: Thailand, U: The USA
13 2000 T T J M S U P N K C: China, I: Indonesia, J: Japan, K: Korea, C M: Malaysia, N: Taiwan, P: The Philippines, S: Singapore, T: Thailand, U: The USA
14 2005 J M U N T C S K I P
15 2005 J M U N T C S K I P
16 A new measurement of international trade
17 Tri-polar Trade through China CHINA Parts and Accessories Final Consumption Goods Other East Asia U.S.A.
18 Tri-polar Trade through China CHINA Other East Asia Value-added U.S.A.
19 Value-added Trade in goods and services
20 International value distribution of ipod Source:Varian, Hal R. An ipod Has Global Value. Ask the (Many) Countries That Make It. The New York Times, June 28, 2007.
21 Production spillover (car industry) Initial Impact Automobiles (Y10 billion) 1st-round Impacts Car chassis (Y650 million) Internal-combustion engines (Y1.52 billion) Glass products (Y130 million) Tires and inner tubes... 2nd-round Impacts Car parts (Y260 million) Cold-finished steel (Y60 million) Steel shar slit (Y20 million) Paint (Y17 million)... Composite rubber (Y30 million) Carbon black (Y10 million) Silk and rayon textiles (Y10 million) Raw rubber (imported) (Y10 million)... 3rd-round Impacts Steel (Y12 million) Wholesale (Y2 million) Road freight transport (Y400,000) Sea shipping (Y200,000)... Dye (Y3.5 million) Chemical fiber (Y2.1 million) Financing (Y300,000) Wholesale (Y300,000)... 4th-round Impacts Rough steel (Y8 million) Electricity (Y400,000) Coal products (Y100,000) Petroleum products (Y40,000)... Intermediate organic chemical products (Y500,000) Composite plastics (Y200,000) Electricity (Y100,000) Wood pulp (Y100,000) Wholesale (Y100,000)...
22 Main Data The Asian International Input-Output Table, constructed by Institute of Developing Economies JETRO Reference years: 1985, 1990, 1995, 2000, 2008(update) Country coverage: China, Japan, Korea, Taiwan, Singapore, Malaysia, Thailand, The Philippines, Indonesia, The U.S.A. Industrial sector classification: 76 sectors for most detailed.
23 Indonesia Malaysia Philippines Singapore Thailand China Taiwan Korea Japan U.S.A. Indonesia Malaysia Philippines Singapore Thailand China Taiwan Korea Japan U.S.A. Export to India Export to Hong Kong Export to EU Export to R.O.W. Statistical Discrepancy Total Outputs A schematic image of the Asian International Input-Output Table Intermediate Demand (A) Final Demand (F) Export (L) code (AI) (AM) (AP) (AS) (AT) (AC) (AN) (AK) (AJ) (AU) (FI) (FM) (FP) (FS) (FT) (FC) (FN) (FK) (FJ) (FU) (LG) (LH) (LO) (LW) (QX) (XX) Indonesia (AI) A II A IM A IP A IS A IT A IC A IN A IK A IJ A IU F II F IM F IP F IS F IT F IC F IN F IK F IJ F IU L IG L IH L IO L IW Q I X I Malaysia (AM) A MI A MM A MP A MS A MT A MC A MN A MK A MJ A MU F MI F MM F MP F MS F MT F MC F MN F MK F MJ F MU L MG L MH L MO L MW Q M X M Philippines (AP) A PI A PM A PP A PS A PT A PC A PN A PK A PJ A PU F PI F PM F PP F PS F PT F PC F PN F PK F PJ F PU L PG L PH L PO L PW Q P X P Singapore (AS) A SI A SM A SP A SS A ST A SC A SN A SK A SJ A SU F SI F SM F SP F SS F ST F SC F SN F SK F SJ F SU L SG L SH L SO L SW Q S X S Thailand (AT) A TI A TM A TP A TS A TT A TC A TN A TK A TJ A TU F TI F TM F TP F TS F TT F TC F TN F TK F TJ F TU L TG L TH L TO L TW Q T X T China (AC) A CI A CM A CP A CS A CT A CC A CN A CK A CJ A CU F CI F CM F CP F CS F CT F CC F CN F CK F CJ F CU L CG L CH L CO L CW Q C X C Taiwan (AN) A NI A NM A NP A NS A NT A NC A NN A NK A NJ A NU F NI F NM F NP F NS F NT F NC F NN F NK F NJ F NU L NG L NH L NO L NW Q N X N Korea (AK) A KI A KM A KP A KS A KT A KC A KN A KK A KJ A KU F KI F KM F KP F KS F KT F KC F KN F KK F KJ F KU L KG L KH L KO L KW Q K X K Japan (AJ) A JI A JM A JP A JS A JT A JC A JN A JK A JJ A JU F JI F JM F JP F JS F JT F JC F JN F JK F JJ F JU L JG L JH L JO L JW Q J X J U.S.A. (AU) A UI A UM A UP A US A UT A UC A UN A UK A UJ A UU F UI F UM F UP F US F UT F UC F UN F UK F UJ F UU L UG L UH L UO L UW Q U X U Freight and Insurance (BF) BA I BA M BA P BA S BA T BA C BA N BA K BA J BA U BF I BF M BF P BF S BF T BF C BF N BF K BF J BF U Import from India (CG) A GI A GM A GP A GS A GT A GC A GN A GK A GJ A GU F GI F GM F GP F GS F GT F GC F GN F GK F GJ F GU Import from Hong Kong (CH) A HI A HM A HP A HS A HT A HC A HN A HK A HJ A HU F HI F HM F HP F HS F HT F HC F HN F HK F HJ F HU Import from EU (CO) A OI A OM A OP A OS A OT A OC A ON A OK A OJ A OU F OI F OM F OP F OS F OT F OC F ON F OK F OJ F OU Import from the R.O.W. (CW) A WI A WM A WP A WS A WT A WC A WN A WK A WJ A WU F WI F WM F WP F WS F WT F WC F WN F WK F WJ F WU Duties and Import Commodity Taxes (DT) DA I DA M DA P DA S DA T DA C DA N DA K DA J DA U DF I DF M DF P DF S DF T DF C DF N DF K DF J DF U Value Added (VV) V I V M V P V S V T V C V N V K V J V U Total Inputs (XX) X I X M X P X S X T X C X N X K X J X U * Each cell of A** and F** represents a matrix of 76 x 76 and 76 x 4 dimension, respectively.
24 Production spillover (car industry) Initial Impact Automobiles (Y10 billion) 1st-round Impacts Car chassis (Y650 million) Internal-combustion engines (Y1.52 billion) Glass products (Y130 million) Tires and inner tubes... 2nd-round Impacts Car parts (Y260 million) Cold-finished steel (Y60 million) Steel shar slit (Y20 million) Paint (Y17 million)... Composite rubber (Y30 million) Carbon black (Y10 million) Silk and rayon textiles (Y10 million) Raw rubber (imported) (Y10 million)... 3rd-round Impacts Steel (Y12 million) Wholesale (Y2 million) Road freight transport (Y400,000) Sea shipping (Y200,000)... Dye (Y3.5 million) Chemical fiber (Y2.1 million) Financing (Y300,000) Wholesale (Y300,000)... 4th-round Impacts Rough steel (Y8 million) Electricity (Y400,000) Coal products (Y100,000) Petroleum products (Y40,000)... Intermediate organic chemical products (Y500,000) Composite plastics (Y200,000) Electricity (Y100,000) Wood pulp (Y100,000) Wholesale (Y100,000)...
25 $300 Traditional approach Trade in value-added -21% US trade deficit with China (billion US$) $200-27% $100-20% $ Source: WTO&IDE s calculation based on UN Comtrade
26 Measuring trade in terms of value-added allows us: To provide a more realistic view of bilateral trade in the light of international production sharing; To avoid multiple counting of trade flows when goods are transferred across borders; To univocally identify the origins of imported products, which helps to implement tax/anti-dumping policies.
27 Thank you!!
28
29 Value Added Intermediate Transaction Schematic image of an I-O table Intermediate Transaction Final Demand Agri & Manu- Service Cons- Invest Export Import Total Mining fact'ing umption -ment Output Agri & Mining Manufacturing Service Wages Profits Depreciation Taxes Total Input
30 Agri & Manu- Service Mining fact'ing Agri & Mining Manufacturing Service Total Output
31 Agri & Manu- Service Mining fact'ing Agri & Mining Manufacturing Service Total Output
32 Agri & Manu- Service Mining fact'ing Agri & Mining Manufacturing Service Total Output
33 Bilateral IIOT between China and USA
34 Indonesia Malaysia Philippines Singapore Thailand China Taiwan Korea Japan U.S.A. Indonesia Malaysia Philippines Singapore Thailand China Taiwan Korea Japan U.S.A. Export to India Export to Hong Kong Export to EU Export to R.O.W. Statistical Discrepancy Total Outputs A schematic image of the Asian International Input-Output Table Intermediate Demand (A) Final Demand (F) Export (L) code (AI) (AM) (AP) (AS) (AT) (AC) (AN) (AK) (AJ) (AU) (FI) (FM) (FP) (FS) (FT) (FC) (FN) (FK) (FJ) (FU) (LG) (LH) (LO) (LW) (QX) (XX) Indonesia (AI) A II A IM A IP A IS A IT A IC A IN A IK A IJ A IU F II F IM F IP F IS F IT F IC F IN F IK F IJ F IU L IG L IH L IO L IW Q I X I Malaysia (AM) A MI A MM A MP A MS A MT A MC A MN A MK A MJ A MU F MI F MM F MP F MS F MT F MC F MN F MK F MJ F MU L MG L MH L MO L MW Q M X M Philippines (AP) A PI A PM A PP A PS A PT A PC A PN A PK A PJ A PU F PI F PM F PP F PS F PT F PC F PN F PK F PJ F PU L PG L PH L PO L PW Q P X P Singapore (AS) A SI A SM A SP A SS A ST A SC A SN A SK A SJ A SU F SI F SM F SP F SS F ST F SC F SN F SK F SJ F SU L SG L SH L SO L SW Q S X S Thailand (AT) A TI A TM A TP A TS A TT A TC A TN A TK A TJ A TU F TI F TM F TP F TS F TT F TC F TN F TK F TJ F TU L TG L TH L TO L TW Q T X T China (AC) A CI A CM A CP A CS A CT A CC A CN A CK A CJ A CU F CI F CM F CP F CS F CT F CC F CN F CK F CJ F CU L CG L CH L CO L CW Q C X C Taiwan (AN) A NI A NM A NP A NS A NT A NC A NN A NK A NJ A NU F NI F NM F NP F NS F NT F NC F NN F NK F NJ F NU L NG L NH L NO L NW Q N X N Korea (AK) A KI A KM A KP A KS A KT A KC A KN A KK A KJ A KU F KI F KM F KP F KS F KT F KC F KN F KK F KJ F KU L KG L KH L KO L KW Q K X K Japan (AJ) A JI A JM A JP A JS A JT A JC A JN A JK A JJ A JU F JI F JM F JP F JS F JT F JC F JN F JK F JJ F JU L JG L JH L JO L JW Q J X J U.S.A. (AU) A UI A UM A UP A US A UT A UC A UN A UK A UJ A UU F UI F UM F UP F US F UT F UC F UN F UK F UJ F UU L UG L UH L UO L UW Q U X U Freight and Insurance (BF) BA I BA M BA P BA S BA T BA C BA N BA K BA J BA U BF I BF M BF P BF S BF T BF C BF N BF K BF J BF U Import from India (CG) A GI A GM A GP A GS A GT A GC A GN A GK A GJ A GU F GI F GM F GP F GS F GT F GC F GN F GK F GJ F GU Import from Hong Kong (CH) A HI A HM A HP A HS A HT A HC A HN A HK A HJ A HU F HI F HM F HP F HS F HT F HC F HN F HK F HJ F HU Import from EU (CO) A OI A OM A OP A OS A OT A OC A ON A OK A OJ A OU F OI F OM F OP F OS F OT F OC F ON F OK F OJ F OU Import from the R.O.W. (CW) A WI A WM A WP A WS A WT A WC A WN A WK A WJ A WU F WI F WM F WP F WS F WT F WC F WN F WK F WJ F WU Duties and Import Commodity Taxes (DT) DA I DA M DA P DA S DA T DA C DA N DA K DA J DA U DF I DF M DF P DF S DF T DF C DF N DF K DF J DF U Value Added (VV) V I V M V P V S V T V C V N V K V J V U Total Inputs (XX) X I X M X P X S X T X C X N X K X J X U * Each cell of A** and F** represents a matrix of 76 x 76 and 76 x 4 dimension, respectively.
35 Production spillover (car industry) 2nd-round Impacts 3rd-round Impacts 4th-round Impacts Rough steel (Y8 million) 1st-round Impacts Car parts (Y260 million) Cold-finished steel (Y60 million) Steel (Y12 million) Wholesale (Y2 million) Electricity (Y400,000) Coal products (Y100,000) Car chassis (Y650 million) Steel shar slit (Y20 million) Road freight transport (Y400,000) Petroleum products (Y40,000) Initial Impact Automobiles (Y10 billion) Internal-combustion engines (Y1.52 billion) Glass products (Y130 million) Paint (Y17 million)... Composite rubber (Y30 million) Carbon black (Y10 million) Sea shipping (Y200,000)... Dye (Y3.5 million) Chemical fiber (Y2.1 million)... Intermediate organic chemical products (Y500,000) Composite plastics (Y200,000) Electricity (Y100,000) Tires and inner tubes Silk and rayon textiles (Y10 million) Financing (Y300,000) Wood pulp (Y100,000)... Raw rubber (imported) (Y10 million) Wholesale (Y300,000) Wholesale (Y100,000)
36 Strength of Linkage = {(l ij δ ij ) + (g ij δ ij )}/2 Length of Where Linkage l ij : Leontief Inverse coefficient Fragmentation level of k A k A k ij ij g ij : Ghosh Inverse coeffcient production k 1 kprocess 1
37 Industry A Industry E Ind D (1) Ind C (2) Ind E Ind A (1) Ind B Ind C Ind D (1) (2) (3) (4) Ind B Ind D Ind E (2) Ind C (3) (3) Ind E Ind D (4) Ind E
38 Industry A Ind D Industry E l ae = 0.20 (100%) Ind A (1) Ind B (1) Ind C Ind C (1) (2) (3) Ind C (2) Ind D (4) (4) Ind E Ind E production Ind B stages Ind D in a supply chain. (2) (3) (3) Ind D Ind E Ind E l (2) =0.10 (50%) l (4) =0.02 (10%) v ae = 1 x 0% + 2 x 50% + 3 x 30% + 4 x (10+10)% + 5 x 0% + = 2.7 Weighted average of the number of l (3) =0.06 (30%) l (4) =0.02 (10%)
39 Trade in value-added and its measurement Retail price: $ (Profit margin: 64%) USA Components: $10.75 CHN Assembly: $6.50 $60.6 $22.96 $30.15 $48.04 JPN KOR GER ROW Apple sold 11.3 million iphones in the US in 2009 iphone: $ ,023 million Trade deficit Source: Xing and Detert, 2010
40 Source: WTO-IDE-JETRO (2011)
41 How to measure TVA Country R s export of value-added to country S: VA RS =V R L RR FD RS +V R L RS FD SS =>Trade balance: Σ S VA RS -Σ S VA SR 41
42 Dreamliner is made in??? Source: Meng & Miroudot
43 Main approaches for measuring Global Value Chains Supply chain analysis using firmlevel micro data (e.g. Apple, Toyota) Structural analysis of trade flows using foreign trade statistics International input-output analysis
44 Production spillover (car industry) 1st-round Impacts. (Y260 m Cold-finis (Y60 m Automobiles (Y10 billion) Initial Impact Car chassis Valueaddeadded (Y650 million) Value- Valueaddeadded Value- Valueaddeadded Value- engines added Internal-combustion Value- (Y1.52 billion) Valueaddeadded Value- Glass productsvalue- added (Y130 million) Valueaddeadded Value- Valueaddeadded Value- Tires and inner tubes (Y30 Composi m Steel s (Y20 m Pa (Y17 m Carbo (Y10 m and ra Silk (Y10 m
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