Working Paper: NBER ID: w29335
Authors: Zhi Wang; Shangjin Wei; Xinding Yu; Kunfu Zhu
Abstract: We develop a unified framework to trace value added along global supply chains in the presence of foreign direct investment by decomposing either GDP based on forward linkages or final production based on backward linkages. The new framework accounts for the presence of foreign invested enterprises (FIEs), their interactions with local firms in the host countries as well as their activities in international trade. The size of the GVC activities identified with this framework roughly doubles that in the previous literature that treats FIEs the same as local firms. The “missing GVC activities” are more serious for high-tech sectors than for those with a lower R&D intensity, and more serious for high-income economies than for middle-income economies.
Keywords: No keywords provided
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| foreign direct investment (FDI) (F23) | global value chain (GVC) activities (F12) |
| foreign direct investment (FDI) (F23) | GVC activities in high-tech industries (L63) |
| foreign direct investment (FDI) (F23) | size of GVC activities (F12) |
| GVC activities (F12) | traditional measures of GVC activities (F12) |