Presentation on theme: "Globalization indicators The Import Content Of Export"— Presentation transcript:
1 Globalization indicators The Import Content Of Export The case of the NetherlandsMarjolijn JaarsmaStatistics NetherlandsApril 27th 2004
2 Agenda Globalization Monitoring globalization with new indicator Definitions, causes and characteristicsOECD introduction ‘globalization’ indicatorsMonitoring globalization with new indicatorImport content of exportInternationalization of production processesProblems in case of the NetherlandsRe-exportsNew model
3 Economic globalization New phase in international economic transactions, characterized by increasing economic interaction and integration among countriesTrade in goods and services increasingly matched by international investment and multinational activityInternational framework has changedStandard (trade) indicators become less tellingNew indicators needed, capable of looking beyond surface FT and FDI
4 How to ‘capture’ globalization Globalization indicator(s) developed by OECDFocused on internationalization of production processes rather than international trade and investment‘Import Content Of Export’The necessity to import in order to be able to exportFraction import in an average unit of exportRelative integration with and dependence on foreign productionA high import content of export not necessarily bad
5 Internationalization of production Analysis of (internationalization of) production processesInput-output tables (Netherlands)Supply consists of intermediate deliveries and deliveries to final demand (e + r)Use consists of intermediate deliveries, import and primary inputsTotal Uses input-output tables OECD Olisnet (40*40 sectors)fIntermediate deliverieserm
6 Input-output analysis (1) Sector output depends on final demand and intermediate demand (which depends on...)Output cycleHow much output must each sector produce?: total amount of final demand: unity matrix: matrix of technical coefficientsAmount of output each sector needs to produce in order to satisfy final and intermediate demandLeontieff inverse
7 Input-output analysis (2) Also imports needed to satisfy intermediate and final demandMatrix MC resembles matrix ARatio of import flow to sector outputVector x: Amount of Dutch outputAdjusted Leontieff inverse excludes importsLeontieff inverse essential in OECD indicator
8 Import content of export ‘Manual of economic globalization indicators’Import Content of Export indicator: share of import per sector of sector output: Leontieff inverse (adjusted!): share of export per sector in total sectoral exportYields a single figure for whole economyRequires the use of Total Uses input-output tables and Import Flows tables (OECD Olisnet)Multiplying the import ratio’s with the Leontieff inverse shows the amount of import needed to produce intermediate demand ánd final demand, i.e. total output. By multiplying this with the share in total sectoral export, the import content of export is calculated.
9 Import content of Dutch exports ICOE risen from 33.6% in 1995 to 34.7% in 1997Decline also found in FT – picked up after 1998
10 Problems Differences classification Re-exports FT data: commodity flowsInput-output tables: economic activityRe-exportsFocusing on m and e/E yields structurally lower ICOEImportant activity for NetherlandsExtracted from trade data and represented separatelyRe-exports not reported separately for many other OECD countries; somehow assigned to sectoral exportsDifferent interpretation ICOE indicator between countriesIndicator might not be ready for cross-country comparisonCountries that separate re-exports from international trade data are: Norway, Finland, Denmark, GermanyCountries that do not separate re-exports from international trade data are: UK, Spain, Japan, Italy, Greece, France
11 New model – Adjusted ICOE Original indicator: Sum of all intermediate import flows entering sectors of production (as a share of output)Leaves out re-exports in m and EExpand composition vector m to include re-exportsMatrix of intermediate import flows (MC)Matrix of re-exports, as a share of sectoral exportFurther manipulationsImport content of export; subdivided for each intermediate delivery!
13 Import content of export per delivery To deliver 1 unit of export, sector j needs intermediate deliveries from sector i, which consist for x% of importsIntermediate deliveries sector 5 (ICT) receives from sector 5, consist for 67.86% of importsUseful for detailed analysis of internationalization production
15 Conclusion Initial indicator overlooks part of Dutch trade Adjusted calculations lead to higher import content of Dutch exportsOn aggregate basis, cross-country comparison possibleDisaggregated suitable for in depth analysisThe fraction imports in an average export unit approximately 40%Further questions