Measures of participation in Global value chains and global business cycles NBER Working Paper No. 23222 Characterizing Global Value Chains: Production Length and Upstreamness NBER Working Paper No 23261 Zhi wang Shang-Jin Wei uibe george Mason University Columbia University and NBER Xinding yu Kunfu zh UIBE UIBE 4th Aug. 2017 aug, UIBE, Beiing
Measures of Participation in Global Value Chains and Global Business Cycles NBER Working Paper No. 23222 Characterizing Global Value Chains: Production Length and Upstreamness NBER Working Paper No. 23261 Zhi Wang UIBE & George Mason University Shang-JinWei Columbia University and NBER Xinding Yu UIBE 4 th Aug, 2017 UIBE, Beijing Kunfu Zhu UIBE
Presentation outline motivations Measures of GVC Participation, Length and Position Decompose GDP and final goods production by country/industry to identify gvC related and unrelated production activities Intuition behind the derivation of these indexes Estimation results Why these new gvc indexes are better? Has gvc become longer or shorter over time? Can these new indexes help to quantify the roles of gvc in the economic shocks of recent global financial crisis Conclusion
Presentation outline • Motivations • Measures of GVC Participation, Length and Position ▪ Decompose GDP and final goods production by country/industry to identify GVC related and unrelated production activities ▪ Intuition behind the derivation of these indexes • Estimation Results ▪ Why these new GVC indexes are better? ▪ Has GVC become longer or shorter over time？ ▪ Can these new indexes help to quantify the roles of GVC in the economic shocks of recent global financial crisis • Conclusion
Measures of Participation in Global Value Chains and Global business cycles Introduction To provide a framework to decompose production activities into different types Pure domestic Traditional final goods trade Simple production sharing(only I border crossing) Complex production sharing (at least 2 border crossings) d Use ICio table to classify the factor embedded in various products into GVC and non- GVC activities based on whether they cross national borders for production or not Forward linkage: Producer's perspective Backward linkage: User's perspective d To propose a set of GVC participation indexes
Introduction ◼ To provide a framework to decompose production activities into different types. ➢ Pure domestic ➢ Traditional final goods trade ➢ Simple production sharing (only 1 border crossing) ➢ Complex production sharing (at least 2 border crossings) ◼ Use ICIO table to classify the factor embedded in various products into GVC and nonGVC activities based on whether they cross national borders for production or not. ➢ Forward linkage: Producer’s perspective ➢ Backward linkage: User’s perspective ◼ To propose a set of GVC participation indexes. Measures of Participation in Global Value Chains and Global Business Cycles
Outline Accounting framework ■ Numerical results d Application: Economic Growth and GVC Participation
Outline ◼ Accounting Framework ◼ Numerical Results ◼ Application: Economic Growth and GVC Participation
Accounting framework Consider a world economy with g countries and n sectors Table l general Inter- Country Input-Output table Outputs Intermediate Use Final demand Total G OUtput Inputs z12z2 z1lry1y2…y1glx1 Intermediate 2221 222 z2gy21 y2 y29‖ly2 Inputs G‖1g1Z z99Yg1 Y92 Y99 X9 Value-added val2Va2|…Vas Total input x),(x2)- Xo)
Accounting Framework Table 1 General Inter-Country Input-Output table Outputs Inputs Intermediate Use Final Demand Total 1 2 ⋯ G 1 2 ⋯ G Output Intermediate Inputs 1 𝑍 11 𝑍 12 ⋯ 𝑍 1𝑔 𝑌 11 𝑌 12 ⋯ 𝑌 1𝑔 𝑋 1 2 𝑍 21 𝑍 22 ⋯ 𝑍 2𝑔 𝑌 21 𝑌 22 ⋯ 𝑌 2𝑔 𝑋 2 ⋮ ⋮ ⋮ ⋱ ⋮ ⋮ ⋮ ⋱ ⋮ ⋮ G 𝑍 𝑔1 𝑍 𝑔2 ⋯ 𝑍 𝑔𝑔 𝑌 𝑔1 𝑌 𝑔2 ⋯ 𝑌 𝑔𝑔 𝑋 𝑔 Value-added 𝑉𝑎 1 𝑉𝑎 2 ⋯ 𝑉𝑎 𝑔 Total input (𝑋 1 ) ′ (𝑋 2 ) ′ ⋯ (𝑋 𝑔 ) ′ ◼ Consider a world economy with G countries and N sectors