Who produces for whom in the world economy?

Who produces for whom in the world economy?

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Article ID: iaor201111999
Volume: 44
Issue: 4
Start Page Number: 1403
End Page Number: 1437
Publication Date: Nov 2011
Journal: Canadian Journal of Economics/Revue canadienne d'conomique
Authors: , ,
Keywords: world trade
Abstract:

For two decades, the share of trade in inputs, also called vertical trade, has been dramatically increasing. In reallocating trade flows to their original input‐producing industries and countries, this paper suggests a new measure of international trade: ‘value‐added trade’ and makes it possible to answer the question ‘who produces for whom?’ In 2004, 27% of international trade was vertical trade. The industrial and geographic patterns of value‐added trade are very different from those of standard trade. Value‐added trade is relatively less important in regional trade but the difference is not more important for Asia than for America.

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