Unveiling the true value of across-strait trade: The global value chain approach

Ruey-Wan Liou, Hsing-Chun Lin, Ching-Cheng Chang and Shih-Hsun Hsu

China Economic Review, 2016, vol. 41, issue C, 159-180

Abstract: Due to the pervasive nature of value chains, an increasing amount of imported intermediate components and raw materials from other countries are entangled in Taiwan's exports to Mainland China. This circumstance leads to odd across-trait bilateral trade amounts and surpluses favorable towards Taiwan. The purposes of this paper are applying Johnson and Noguera (2012) to extricate value-added exports earned by Taiwan from China and Wang, Wei, and Zhu (2013) to decompose Taiwan's gross exports to China into various meaningful components. The two issues are related to trade in value added and value added in trade. Specifically, the former explores the value added embedded in the source country's exports to the absorbing country as final demand, regardless of whether those goods are directly or indirectly arriving at the absorbing country. The latter only looks where the value added is originated regardless of where it is ultimately absorbed. We show both concepts aim to measure a country's value added from its trades, but from different angles. Each has its own distinct meaning. They are related, but not completely the same.

Keywords: Across-strait trade; Trade in value added (TiVA); Value added in trade; Inter-country input–output table (search for similar items in EconPapers)
JEL-codes: E01 E16 F1 F14 F23 L14 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:41:y:2016:i:c:p:159-180

DOI: 10.1016/j.chieco.2016.10.001

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