1 Bilateral trade flows and input-output analysis Colin Webb OECD STI/EAS

2 Introduction 3 rd edition of OECD Input-Output (I-O) database currently being finalised ‘Harmonised’ tables based around the year 2000 and expanded country coverage: 28 OECD countries and 7 non-OECD countries STI Working Paper 2006/7 by Wixted, Yamano and Webb discusses a range of uses of OECD’s ‘harmonised’ Input-Output (I-O) tables OECD’s Bilateral Trade by industry Database (BTD) plays an important role

3 OECD I-O - increased global coverage Share of global population by edition share of global GDP by edition

4 Basic domestic Input-Output table

5 Role of trade data (1) Create total transaction matrix by adding import matrix to domestic transaction matrix Import matrix generated by distributing total imports across industries Country source tables used where available Otherwise, tables estimated at OECD Bilateral trade may play minor role

6 Uses of National Tables Simple structural analyses By converting monetary values in transaction matrix to coefficients (A), a range of n th order effects can be modelled via Leontief inverse (I-A) -1 : Extent to which domestic R&D, or CO 2 emissions (or anything), is embodied in domestic output E x (I-A) -1 D Impact of imported intermediates on productivity Import content of exports Service sector value added embodied in manufactures

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8 Role of trade data (2) BTD used to link national I-O tables. via trade flows of goods, to produce international I-O models BTD and I-O thus have compatible industry lists. Imports by declaring countries are used to determine shares from partner countries For trade in services, much estimation required

9 Uses of Linked I-O Tables Extending analyses of embodied technology, or CO2, by including technology, or CO2, embodied in imported goods E x (I-A) -1 D + ∑E c x {M c x (I-A) -1 D +D c } ‘adjusted’ measures of import content of exports Identifying and analysing global value chains … … impacts of international outsourcing (offshoring) – on domestic employment, global greenhouse gas emissions etc … … inter-dependencies between countries; spatial clusters

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11 Trade balance in CO 2 emissions – percentage of domestic production

12 Limitations of data Timeliness – I-O tables often released with lag of 5 years … … and represent fixed point in time Not enough detail for certain industrial sectors Product to industry conversion keys can be flawed Significant presence of re-exports / re-imports Second-hand goods, recycled materials Scarcity of bilateral trade in services by industry

13 Motivation ● Many Uses, but also many users … ● General increase in use of international linked I-O models to address a wide range of policy issues ● High and increasing demand for OECD ‘harmonised’ tables - Over 650 requests for 2002 edition in last 20 months ● High response rate to an informal I-O users’ survey – showing strong recognition of OECD’s contribution

14 Next Steps ● Finalise 2006 edition of OECD I-O tables ● Release technical documentation as STI working paper ● Disseminate new I-O tables (via OLIS etc) ● Finalise HS  ISIC Rev.3 conversion in new system... ● … then develop final versions of BTD tables for ‘major’ non-OECD countries ● Co-ordination with other organisations to determine feasibility of pooling resources for future development of ‘harmonised’ I-O tables and related data tools.

15 How can trade statisticians help? ● Contribute to country source import matrices to complement benchmark I-O tables ● More information concerning re-exports / re-imports ● Develop bilateral trade in goods by industry data within national statistical offices ● Continue improvements in trade in services data ● Raise awareness of potential of international I-O analyses and vital role of bilateral trade data Thank you