Measuring FDI and Trade-related Interdependence Across Countries: The Case of the United States and China

Zhi Wang (), Shang-Jin Wei, Xinding Yu and Kunfu Zhu

No 34226, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Based on the new integrated accounting framework of global supply chains (GSC) (Wang, Wei, Yu, and Zhu, 2025), we derive three types of economic dependence (producers’ dependence on upstream supplies, producers’ dependence on downstream markets, and consumers’ dependence on supply chains) that take into account of the presence of foreign invested firms as well as international trade. To measure indirect value flows between the origin and destination countries that are mediated through third economies, we show a need to go beyond both trade-in-value added and gross trade statistics. As an application, we derive new measures of inter-dependence between the United States and China.

JEL-codes: F0 F1 F2 (search for similar items in EconPapers)
Date: 2025-09
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