Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research

Robert Johnson

Journal of Economic Perspectives, 2014, vol. 28, issue 2, 119-42

Abstract: Due to the rise of global supply chains, gross exports do not accurately measure the amount of value added exchanged between countries. I highlight five facts about differences between gross and value-added exports. These differences are large and growing over time, currently around 25 percent, and manufacturing trade looks more important, relative to services, in gross than value-added terms. These differences are also heterogenous across countries and bilateral partners, and changing unevenly across countries and partners over time. Taking these differences into account enables researchers to obtain better quantitative answers to important macroeconomic and trade questions. I discuss how the facts inform analysis of the transmission of shocks across countries; the mechanics of trade balance adjustments; the impact of frictions on trade; the role of endowments and comparative advantage; and trade policy.

JEL-codes: F11 F14 F23 L16 L23 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/jep.28.2.119
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Citations: View citations in EconPapers (217)

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