Vertical specialisation indicator based on supply-driven input-output model

Bo Meng, Norihiko Yamano and Webb Colin

No 270, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: “Import content of exports”, based on Leontief’s demand-driven input-output model, has been widely used as an indicator to measure a country’s degree of participation in vertical specialisation trade. At a sectoral level, this indicator represents the share of inter-mediates imported by all sectors embodied in a given sector’s exported output. However, this indicator only reflects one aspect of vertical specialisation – the demand side. This paper discusses the possibility of using the input-output model developed by Ghosh to measure the vertical specialisation from the perspective of the supply side. At a sector level, the Ghosh type indicator measures the share of imported intermediates used in a sector’s production that are subsequently embodied in exports by all sectors. We estimate these two indicators of vertical specialisation for 47 selected economies for 1995, 2000, 2005 using the OECD’s harmonized input-output database. In addition, the potential biases of both indicators due to the treatment of net withdrawals in inventories, are also discussed.

Keywords: Developing countries; Developed countries; Input-output tables; International trade; Vertical specialisation; Ghosh inverse; Supply-driven; Input-output (search for similar items in EconPapers)
JEL-codes: F1 F14 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (4)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 270. 2010-12

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