1.  wiiw 1 Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at Robert Stehrer The Vienna Institute for International Economic Studies (wiiw) Robert.Stehrer@wiiw.ac.at WTO workshop, February 2-4, 2011 – WTO, Geneva Version: 2011-02-01 Decomposing net trade in value added and the patterns of trade in factors The WIOD-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.  wiiw 2 WIOD project – www.wiod.org  The World Input-Output Database (WIOD)  Project funded within the 7th framework program of the EU -10+OECD partners involved -Project started in May 2009 and ends in April 2012  Construction and applications -Construction of inter-country SUT/IO tables -Socio-economic and environmental satellite accounts -Data publicly available in May 2012 -Various applications...

3.  wiiw 3 WIOD project – Data coverage  Inter-country Supply-Use and Input-Output tables -Benchmarked to NA data  Period: 1995-2006 (maybe with extension)  40 countries included -EU-15 countries -EU-12 countries -NAFTA: Canada, USA, Mexico -BRI: Brazil, Russia, India -CHN: China -OTHER: Turkey, Japan, South Korea, Taiwan, Indonesia, Australia  Sector and product classifications of SUTs -59 products (corresponding to CPA) -35 industries (corresponding to NACE rev. 1)

4.  wiiw 4 WIOD project – Data coverage  Trade data -Goods trade (HS 6-digit – use category – CPA) -Services trade (BoP codes)  Satellite accounts -Energy and environment (emmission, etc.) -Socio-economic indicators  Capital (ICT and Non-ICT)  Labour by three educational attainment categories  Deflated tables

5.  wiiw 5 Dataflows and construction steps

6.  wiiw 6 Construction of International WIOT

7.  wiiw 7 Value added trade and the factor content of trade Related literature  Vertical specialisation -Hummels, Ishii and Yi (2001), etc. -Daudin, Rifflart and Schweisguth (2008, 2009) -Johnson and Noguera (2009) -Koopman, Power, Wang and Wei (2010) -Many others -Focus on exports  Factor content of trade (when intermediates are traded) -Reimer (2006) -Trefler and Zhu (2010) -Focus on HOV and relationship of trade in factors to endowments  This approach: -Foster and Stehrer (2011), forthcoming -Focus: Decomposition of net trade in value added and components

8.  wiiw 8 Accounting for trade in intermediates (following Reimer, JIE 2006; Trefler and Zhu, JIE 2010) N … Number of countries; G … Number of industries; F … Number of factors Direct plus indirect factor input A … coefficient matrix of dimension NG x NG D … direct factor input matrix of dimension F x NG ‘Bilateral’ (NG x N) import-export matrix Value added trade and the factor content of trade

9.  wiiw 9 Factor content of trade with three countries for country c=1 where Some manipulations … Value added trade and the factor content of trade

10.  wiiw 10 Value added trade and the factor content of trade Direct exports Indirect exports (‘true’ VS1 ) Direct imports Re-Imports (VS1 ) Indirect imports

11.  wiiw 11 Selected results  Decomposition of net value added trade and components  Regional patterns of net value added trade and components  Notes : Focus of presentation on EU-15 and NAFTA January 2011 version of WIOD ROW not included in calculations Results partly based on imputed values regarding factor inputs

12.  wiiw 12 Decomposition of value added trade EU-15 NAFTA in bn US-$

13.  wiiw 13 Decomposition of trade in labour EU-15 NAFTA in bn US-$

14.  wiiw 14 Decomposition of trade in high-educated labour EU-15 NAFTA in bn US-$

15.  wiiw 15 Net exports of EU-15 Goods and services Value added in bn US-$

16.  wiiw 16 Net exports of NAFTA Goods and services Value added in bn US-$

17.  wiiw 17 Net exports in labour and capital services – EU15 Labour Capital in bn US-$

18.  wiiw 18 Net exports in labour and capital services – NAFTA Labour Capital in bn US-$

19.  wiiw 19 Net exports by educational categories EU-15 NAFTA in bn US-$

20.  wiiw 20 Trade in value added: ICT capital in bn US-$

21.  wiiw 21 Next steps: Analysis the obvious candidates which are mutually related (Directed) Factor and sector biased technical change Change in trade and output patterns Change in intermediates trade Change in factor rewards  Decomposition based on basic equation  Further steps, extensions, caveats: Breakdown of trade data into final goods and intermediates (and subcomponents like P&C) Sectoral breakdowns and differentiations Bilateral relations Testing HOV theorem with traded intermediates Double counting problem Non-competing imports

22.  wiiw 22 Next steps: Data  Improvement on data  Improving national SUTs  Improving bilateral trade in services and trade in goods Re-exports  Improving breakdown by use categories (see below) Comparing our use-classification of trade flows with official import IO tables.  Improving factor input data for non-OECD countries as part of work by World KLEMS consortium  Constant price series  Additional data  Processing export trade tables for Mexico and China  Margin tables (transport costs, tariffs, and domestic margins of exports)

23.  wiiw 23 Thank you for attention! Robert Stehrer The Vienna Institute for International Economic Studies – wiiw www.wiiw.ac.at Robert.Stehrer@wiiw.ac.at The WIOD project: www.wiod.org