Are global value chains truly global? A new perspective based on the measure of trade in value-added

Discussion Papers

No.736

by Bo Meng, Hao Xiao, Jiabai Ye, and Shantong Li

January 2019

ABSTRACT

Are global value chains (GVCs) truly global or are they more of a regional phenomenon? Opinions concerning this issue are widely divergent in the literature. This paper provides new perspectives on GVCs using network analysis based on the concept of trade in value-added. By using a multiregional input-output model, we first show that GVC activities can be consistently identified at the country, sector, and bilateral levels according to the number of times that factor contents cross national borders in global production sharing. This allows us to group trade-related, value-added creation activities into three networks, including traditional trade, simple GVC trade, and complex GVC trade networks. Further, we use network analysis tools based on the Asian Development Bank’s Multiregional Input-Output Tables covering 62 economies and 35 sectors between 2000 and 2017 to investigate changes in the topology and structure of different types of GVC networks. Our results show that the characteristics of GVCs largely depend on the viewpoint of the participating country (as a supplier or demander), the type of trade, and the aggregate level of trade in the corresponding networks.

Keywords: global value chains, network, trade in value-added, input-output model

JEL classification: F6, F13, F15, D57

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