Measuring Trade in Value Added with Firm-Level Data

Rudolfs Bems and Ken Kikkawa

No 14281, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Global Value Chains have proliferated in economic policy debates. Yet a key concept—trade in value added—is likely mismeasured because of sectoral aggregation bias stemming from reliance on input-output tables. This paper uses comprehensive firm-level data on domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added. The magnitude of the bias varies across countries—at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firms' import and export intensities and size determine the magnitude of the bias.

Keywords: Global value chains; Input-output tables; Aggregation bias (search for similar items in EconPapers)
JEL-codes: E01 F14 L14 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-int and nep-mac
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Measuring trade in value added with firm-level data (2021)
Working Paper: Measuring trade in value added with Firm-Level Data (2019)
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