Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera, Accounting for Intermediates: Production Sharing and Trade in Value Added

Masaaki Kuboniwa ()

No 598, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: In light of growing intermediate goods trade, Johnson and Noguera (2012) developed theoretical and empirical research on the new concept of trade in value added in place of gross trade. However, they did not deal with the relationship between the new value added trade balance and the gross trade balance. Presented here is that in the case of two countries and many sectors the new value added trade balance always equals the gross trade balance. We verify this proposition by using an international input-output data compiled by Groningen University. In the case with three countries (China, the USA and the rest of the world; ROW) and many sectors, the China-USA trade balance or the USA-China imbalance measured in value added for 2010 is 23.5% smaller than that in gross terms, whereas the China-ROW trade balance in value added is 94% larger than that in gross terms.

Keywords: trade in value added; gross trade; input-output tables; global supply chain (search for similar items in EconPapers)
JEL-codes: C67 D57 F1 R15 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2014-01
New Economics Papers: this item is included in nep-int
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:hit:hituec:598

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