Working Paper: NBER ID: w18186
Authors: Robert C. Johnson; Guillermo Noguera
Abstract: We combine data on trade, production, and input use to compute the value added content of trade for forty-two countries from 1970 to 2009. For the world, the ratio of value added to gross trade falls by ten to fifteen percentage points, with two-thirds of this decline in the last two decades. Across countries, declines range from zero to twenty-five percentage points, with large declines concentrated among countries undergoing structural transformation. Across bilateral trade partners, declines are larger for nearby partners and partners that adopt regional trade agreements. That is, both policy and non-policy trade costs shape production fragmentation.
Keywords: Trade; Value Added; Global Supply Chains
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade barriers (F14) | production fragmentation (F12) |
| regional trade agreements (F13) | VAX ratios (Y10) |
| distance (R12) | VAX ratios (Y10) |
| economic development (O29) | trade fragmentation (F12) |
| VAX ratio (Y10) | production fragmentation (F12) |