Implications of measuring value added in exports with a regional input-output table. A case of study in South America

Abstract

Global value chains (GVC) describe the functioning of international trade today. A widely used way to measure GVC is the input-output analysis. However, many developing countries are not covered in the main multi-regional input-output (MRIO) databases, hindering the measurement of GVC in regions like South America. The purpose of this paper is to analyse the role of South America in GVC using a novel regional input-output table (RIOT). To this end, a novel adaptation of Koopman, Wang and Wei gross exports decomposition scheme, suitable for any RIOT, is created. The implications of using a RIOT are assessed. Besides, the results are complemented with those obtained using a MRIO table. It is confirmed the low insertion of South America in GVC and its upstream position as a provider of intermediate goods and services. Imported content in South American exports comes mostly from outside the region and only Uruguay is vertically integrated.