Vertical specialization across the world: a relative measure

João Amador () and Sonia Cabral ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates a specific aspect of international production linkages that, following Hummels et al. (2001), is commonly designated as vertical specialization (VS) - the use of imported inputs to produce goods that are afterwards exported. We propose a relative measure of VS-based trade that combines information from Input-Output matrices and international trade data, producing results for a large sample of individual countries and geographical areas with a detailed product breakdown over the 1967-2005 period. This measure identifies a country’s trade flow as associated with VS activities when the share of exports of a good relatively to the world average is above a given threshold and it is accompanied by a relative share of imports of a related intermediate product that is also above the threshold. The quantification of VS-based trade for each country/product pair in each period is made in a relative and conservative manner, since it includes only the value of intermediate imports that surpasses what is implied by the chosen international threshold. The detailed results can be subsequently added up to get any product or geographical breakdown desired. We illustrate this measure by showing the evolution of VS activities at the world level over the last four decades using a product breakdown by technological intensity and a geographical breakdown by main areas. The results point to a substantial increase of VS in high-technology products over the last two decades. There is also empirical evidence on the sharp increase of VS activities in East Asia.

Keywords: International Trade; International Fragmentation of Production; Vertical Specialization; Globalization (search for similar items in EconPapers)
JEL-codes: F1 F14 F15 O50 (search for similar items in EconPapers)
Date: 2008-07-18
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published in Banco de Portugal Working Papers 10-2008 (2008): pp. 1-28

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Related works:
Journal Article: Vertical specialization across the world: A relative measure (2009)
Working Paper: Vertical Specialization Across the World: A Relative Measure (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9618

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