What place does Luxembourg hold in global value chains?

Gabriele Di Filippo

No 120, BCL working papers from Central Bank of Luxembourg

Abstract: The paper analyses the place held by Luxembourg in global value chains (GVC) by relying on trade in value added data retrieved from OECD inter-country input-output tables, available over the period 1995-2011. The analysis is multifaceted as the role of Luxembourg in GVC is analyzed across 50advanced and emerging market economies, at the country level, at the sector level and over time. Results show that Luxembourg acts as an important chain-link in GVC as evidenced by its strong upstream and downstream interconnections with other partner countries. Luxembourg is primarily a buyer of foreign value added and less a seller of domestic value added. The major part of Luxembourg’s GVC trading partners is located in Western Europe suggesting that the supply chain network is not global for Luxembourg but rather regional. Notwithstanding this, the share of East Asian and Eastern European emerging countries - albeit relatively low compared to advanced economies - is increasing over the period of analysis. A similar observation prevails for the geographical breakdown of the origin (destination) of foreign (domestic) value added for domestic (foreign) final demand at the end of the value chain. The analysis unveils that Luxembourg possesses a comparative advantage in GVC in the finance and insurance industry. It is from the latter sector that the country retrieves the most important share of valueadded from GVC participation.

Keywords: International trade; Global value chains; Gross trade statistics; Trade in value added statistics; Inter-country input-output tables (search for similar items in EconPapers)
JEL-codes: D57 F14 F20 F21 F23 (search for similar items in EconPapers)
Pages: 94 pages
Date: 2018-04
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https://www.bcl.lu/en/publications/Working-papers/120/BCLWP120.pdf (application/pdf)

Related works:
Working Paper: What Place does Luxembourg hold in Global Value Chains? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bcl:bclwop:bclwp120

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