Presentation is loading. Please wait.

Presentation is loading. Please wait.

The Factor Content of Trade: Global trends since 1995 Abdul A. Erumban Marcel P. Timmer Gaaitzen J. de Vries University of Groningen WIOD conference, Vienna,

Similar presentations


Presentation on theme: "The Factor Content of Trade: Global trends since 1995 Abdul A. Erumban Marcel P. Timmer Gaaitzen J. de Vries University of Groningen WIOD conference, Vienna,"— Presentation transcript:

1 The Factor Content of Trade: Global trends since 1995 Abdul A. Erumban Marcel P. Timmer Gaaitzen J. de Vries University of Groningen WIOD conference, Vienna, 26-28 May 2010 This project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities. Grant Agreement no: 225 281

2 Aim of this paper Measure the factor content of imports and exports by country Relevant for many important policy questions: Who benefits from the stimulus package for car manufacturers in Europe? Who is adding the brains to electronic products, and is this changing over time? Is a country upgrading the skill-content of its exports? Or which exported products see an increase in the skill-content?

3 Aim of this paper Measure the factor content of trade for The 40 countries in WIOD The period 1995-2006 Distinguish production factors: ICT and non-ICT capital, low-, medium-, and high-skilled employment Allow for trade in intermediate inputs Allow for differences in technology across countries (e.g. because of factor price differences)

4 Global production unbundling for the hard-disc drive

5 Related literature Studies related to the effectiveness of import-substitution policies (e.g. Syrquin and Urata 1986 JDE; Chenery, Robinson, and Syrquin 1986) (as well as for projection and forecasting purposes) Vertical specialization (Gourevitch 2000 WD; Hummels et al. 2001, JIE) Factor content of trade, testing Heckscher-Ohlin-Vanek predictions (Dietzenbacher and van der Linden 1995 JRS; Davis and Weinstein 2001 AER; Reimer 2006 JIE; Johnson 2008; Trefler and Zhu 2010 JIE; Johnson and Noguera 2010 JIE; Feenstra and Hong 2007 NBER)

6 Data (1) Data requirements to measure the factor content of trade: By country for the period 1995-2006: Supply and Use tables A M, the N x N imported coefficient matrices A D, the N x N domestic coefficient matrices Bilateral trade data WORLD KLEMS database By country and industry for the period 1995-2006: Capital compensation by industry Low-, medium-, and high-skilled employment PPPs (current version uses exchange rates)

7 Data (2) Major data steps: Obtain and harmonize official Supply and Use tables. Benchmark SUTs on the national accounts and inter/extrapolate SUTs using the SUTRAS program (Temurshoev and Timmer 2010). Construction of a KLEMS database for non-EU countries Construction of global input-output matrix using imported coefficient matrix and bec classification

8 Methodology (1) Net output of goods N for country C: y C = x C - A x C (1) where, y C is net output (NC x 1), x C is an (NC x 1) gross output vector, and A is an interregional input-output matrix of dimension (NC x NC) Trade in goods: t C = y C – d C (2) where t C represents country Cs exports of goods (NC x 1) for intermediate or final use, and d C is demand for final use.

9 Methodology (2) Define a total factor input matrix: B * = B ( I – A) -1 (3) Where B is a direct factor input matrix (F x NC), I an identity matrix, and B * the total factor input matrix. The Measured Factor Content of Trade (MFCT) for country C is: B * t C = B * y C – B * d C (4)

10 Results for the USA (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total United Statesnet exports 11,548 53,042 (43,439) 54,993 71,106 USA imports forUSA production 5,684 41,240 31,789 44,959 26,623 USA imports forUSA final use 5,597 39,797 32,872 44,718 26,033 USA exports forGER production 671 3,940 584 4,096 3,679 USA exports forGER final use 383 2,273 375 2,409 2,086 USA exports forJPN production 1,114 8,528 1,434 8,092 6,142 USA exports forJPN final use 680 5,380 962 5,329 3,892 USA exports forROW production 13,558 74,397 10,764 79,772 71,801 USA exports forROW final use 6,423 39,561 7,103 44,973 36,162

11 Results for the USA (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total United Statesnet exports 11,548 53,042 (43,439) 54,993 71,106 USA imports forUSA production 5,684 41,240 31,789 44,959 26,623 USA imports forUSA final use 5,597 39,797 32,872 44,718 26,033 USA exports forGER production 671 3,940 584 4,096 3,679 USA exports forGER final use 383 2,273 375 2,409 2,086 USA exports forJPN production 1,114 8,528 1,434 8,092 6,142 USA exports forJPN final use 680 5,380 962 5,329 3,892 USA exports forROW production 13,558 74,397 10,764 79,772 71,801 USA exports forROW final use 6,423 39,561 7,103 44,973 36,162

12 Results for the USA (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. High- skilled empl. Shares (product. or final use) Total United Statesnet exports 11,548 53,042 (43,439) 71,106 USA exports forGER production 671 3,940 584 3,67964% USA exports forGER final use 383 2,273 375 2,08636% USA exports forJPN production 1,114 8,528 1,434 6,14261% USA exports forJPN final use 680 5,380 962 3,89239% USA exports forROW production 13,558 74,397 10,764 71,80167% USA exports forROW final use 6,423 39,561 7,103 36,16233%

13 USA and JAPAN (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total United Statesnet exports 11.548 53.042 (43.439) 54.993 71.106 Total Japannet exports 5.302 58.216 3.860 55.512 16.190 Difference 6.247 (5.174) (47.299) (519) 54.917

14 Concluding remarks USA relatively large exporter of IT capital and high-skilled employment compared to Japan in 1995 Much further data work is needed (interregional table for 40 WIOD countries, factor content for non-EU countries) Measure factor content using volumes instead of values Methodologically advance using price indices Many applications for policy analysis appear feasible.

15 Additional material

16 Results for Japan (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total Japannet exports 5,302 58,216 3,860 55,512 16,190 JPN imports forJPN production 3,969 26,968 15,278 26,661 18,986 JPN imports forJPN final use 2,041 14,241 7,988 14,767 10,231 JPN exports forGER production 336 2,488 638 2,464 1,249 JPN exports forGER final use 311 2,581 706 2,557 1,206 JPN exports forUSA production 1,441 13,250 3,712 12,921 5,867 JPN exports forUSA final use 1,513 13,159 3,727 13,312 6,040 JPN exports forROW production 4,288 39,005 10,489 37,366 17,706 JPN exports forROW final use 3,422 28,942 7,855 28,321 13,341

17 Results for Japan (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total Japannet exports 5,302 58,216 3,860 55,512 16,190 JPN imports forJPN production 3,969 26,968 15,278 26,661 18,986 JPN imports forJPN final use 2,041 14,241 7,988 14,767 10,231 JPN exports forGER production 336 2,488 638 2,464 1,249 JPN exports forGER final use 311 2,581 706 2,557 1,206 JPN exports forUSA production 1,441 13,250 3,712 12,921 5,867 JPN exports forUSA final use 1,513 13,159 3,727 13,312 6,040 JPN exports forROW production 4,288 39,005 10,489 37,366 17,706 JPN exports forROW final use 3,422 28,942 7,855 28,321 13,341

18 Results for Japan (1995) (in billions of euros) ICT capital Non-ICT capital Low- skilled empl. Medium- skilled empl. High- skilled empl. Total Japannet exports 5,302 58,216 3,860 55,512 16,190 JPN imports forJPN production 3,969 26,968 15,278 26,661 18,986 JPN imports forJPN final use 2,041 14,241 7,988 14,767 10,231 JPN exports forGER production 336 2,488 638 2,464 1,249 JPN exports forGER final use 311 2,581 706 2,557 1,206 JPN exports forUSA production 1,441 13,250 3,712 12,921 5,867 JPN exports forUSA final use 1,513 13,159 3,727 13,312 6,040 JPN exports forROW production 4,288 39,005 10,489 37,366 17,706 JPN exports forROW final use 3,422 28,942 7,855 28,321 13,341


Download ppt "The Factor Content of Trade: Global trends since 1995 Abdul A. Erumban Marcel P. Timmer Gaaitzen J. de Vries University of Groningen WIOD conference, Vienna,"

Similar presentations


Ads by Google