Global Input-output Model Research Articles

Examining the Bilateral Relationship between Mexico and South Korea through the Trade in Value-Added Perspective, 2000–2021

This article examines the trade relationship between Mexico and South Korea through the lens of trade in value-added perspective. Using the global input–output model, we dissect gross exports into their value-added components to analyze the sectors benefiting most from value-added generation in both countries. To do this, we use the multiregional input–output matrices developed by the Asian Development Bank (ADB). The results show a growing bilateral relationship between 2000 and 2021, with South Korea having a stronger position by generating a larger share of value-added linked to the bilateral relationship. Nevertheless, the gap has narrowed over time. Notably, South Korean exports to Mexico have substantially contributed to value-added generation in technology-based manufacturing sectors such as machinery, equipment, electronics, electrical, and optical products. Similarly, Mexico’s mining sector increasingly relies on exports to South Korea for value-added generation. The trends observed in this study’s findings persist even amidst the reconfiguration of Global Value Chains, indicating that a free trade agreement between Mexico and South Korea has the potential to further enhance value-added generation.

Rebound effects may jeopardize the resource savings of circular consumption: evidence from household material footprints

The circular economy model aims to reduce the consumption of virgin materials by increasing the time materials remain in use while transitioning economic activities to sectors with lower material intensities. Circular economy concepts have largely been focussed on the role of businesses and institutions, yet consumer changes can have a large impact. In a more circular economy consumers often become users—they purchase access to goods and services rather than physical products. Other consumer engagement includes purchasing renewable energy, recycling and using repair and maintenance services etc. However, there are few studies on whether consumers actually make these sorts of consumption choices at large scale, and what impacts arise from these choices on life-cycle material consumption. Here we examine what types of households exhibit circular consumption habits, and whether such habits are reflected in their material footprints. We link the Eurostat Household Budget Survey 2010 with a global input-output model and assess the material footprints of 189 800 households across 24 European countries, making the results highly generalizable in the European context. Our results reveal that different types of households (young, seniors, families etc) adopt different circular features in their consumption behaviour. Furthermore, we show that due to rebound effects, the circular consumption habits investigated have a weak connection to total material footprint. Our findings highlight the limitations of circular consumption in today’s economic systems, and the need for stronger policy incentives, such as shifting taxation from renewable resources and labour to non-renewable resources.

The Global Value Chain Position and Evolution Path of China’s Domestic-owned and Foreign-owned Enterprises: Measurement Based on Industry Data

Multinational enterprises link domestic value chains and global value chains（GVCs）, so understanding their activities is fundamental to understanding GVCs. However, few studies focus on Chinese foreign-owned enterprises’ position in GVCs. In this paper, China’s industry data are divided into domestic-owned and foreign-owned enterprises, and production, trade and investment are integrated into a unified framework of GVCs. Based on the global input-output model considering heterogeneity between domestic-owned and foreign-owned enterprises, this paper constructs forward and backward production length index, analyzes Chinese domestic-owned and foreign-owned enterprises’ position and evolution path in GVCs from the perspectives of production and consumption. The results show that: Domestic-owned enterprises are in a more upstream position in GVCs than foreign-owned enterprises. Domestic-owned enterprises have a more complete production chain in China, which makes a greater contribution to domestic production and consumption. Foreign-owned enterprises have a significant proportion of the GVC production chain, with obvious export-oriented characteristics. The decomposition of forward and backward production chains show that the GVC production chain is the longest, and the traditional trade production chain is longer than the pure domestic production chain for both domestic-owned and foreign-owned enterprises. Both of them have the characteristics of “dual production structure”, i.e. the GVC production chain is more complex, and export production is more complicated than pure domestic production. From the perspective of industries, most industrial production chains of domestic-owned enterprises are longer than that of foreign-owned enterprises, and the production chain of manufacturing industry is longer than that of service industry. The pure and traditional trade production length of foreign-owned enterprises are almost equal to 1, while the pure and traditional trade production length of domestic-owned enterprises are larger than 2, which indicates that foreign-owned enterprises play a small role in domestic production, and the upgrading of domestic industrial structure mainly depends on the production and consumption of domestic-owned enterprises. From the perspective of evolution path, most domestic-owned enterprises evolve along path 1 in GVCs, with longer production length and closer industrial links, while most foreign-owned enterprises evolve along path 2 and path 4 in GVCs, indicating that they are outflowing from China. Therefore, domestic-owned enterprises should further strengthen the separation of functions and spaces, and be more actively embedded in GVCs; China should care about the manufacturing industry which could drive and promote its upstream and downstream industries, and not abandon the processing manufacturing industry and turn to the high-tech or modern service industry blindly; it should also maintain the consistency of trade and industrial policies, and guide foreign investment in China in a rational way.

MRIO model-based study on water nitrogen pollution transfer embodied in international trade

This study uses the global pollutant emission databases and global input–output model in 2015 to calculate the impact of international trade on global water nitrogen emission patterns, based on con...

Sectoral linkages at the beginning of the 21st century: The role of Polish economy in global production structures

This paper provides a first attempt in analyzing the role of Polish economy in the production structure of the global economy in the early years of the 21st century. For the purpose of this analysis, we propose a new approach in which two most important aspects of interindustry linkages in a global input-output model are examined. Contrary to previous studies focused on output-oriented key sector analyses in post-communist CEE economies, we focus on a fundamental policy target variable – income per gross output. In order to analyze the issues in question in a dynamic framework, the empirical results are based on the 2000 and 2014 global intercountry input-output tables for the 28 EU countries as well as 15 other major countries in the world.

On using dynamic IO models with layers of techniques to measure value added in global value chains

We propose a new approach to forecasting the future paths of value-added-related indexes in the framework of global value chains (GVCs) in a global input-output model. The proposed methodology may be applied to different groups of counties and sectors in a global IO framework under various scenarios regarding technological progress. In an illustrative empirical case study, we focus on four groups of economies and seven groups of sectors. The preliminary results suggest that the East Asian economies, AUNAFTA, and the EU countries are expected to improve the efficiency in building their comparative advantage within the GVC framework, while the largest developing economies are not.

‘Environmental load displacement’ from the North to the South: A consumption-based perspective with a focus on China

Quantifying environmental load displacement from developed countries (the North) to developing countries (the South) is of particular importance for understanding the environmental implications of consumption in the North and global sustainability. Based on a global input–output model, this paper estimates emissions transfers between the North and the South for eight types of air pollutants from a consumption perspective, with a focus on emissions transfers between the North and China. The results show that 14%–30% of air pollutant emissions in the South were caused by consumption in the North in 2007. There is a large ‘pollution deficit’ between the North and South, which significantly increased during the period 1995–2007, that favors the theory of ecologically unequal exchange. Although the emissions per capita of the North from production for most air pollutants decreased over this period, the emissions per capita from consumption increased or decreased more mildly. The decomposition of emissions transfers further shows that South–South trade in intermediates has played an increasingly important role in environmental load displacement from the North to the South. It is important to assess the sustainability of so-called ‘weightless economies’ in the North from a global perspective that takes environmental load displacement into account.

Analysis on CO2 Emissions Transferred from Developed Economies to China through Trade

AbstractBased on a global input–output model, this paper investigates the CO2 emission transfer between China and developed economies through trade. The results show that approximately 15–23 percent of China's production‐based emissions during 1995–2009 were induced by the production of goods and services satisfying final demand in developed economies. Decomposition of emission transfers shows that trade of intermediate products played a significant role in emission transfer from developed economies to China. Most developed economies have consumption‐based emission responsibilities that are higher than their production‐based responsibilities, whereas China's consumption‐based responsibility is significantly lower than its production‐based responsibility. We argue that a fair and efficient carbon accounting approach should take CO emission transfers from developed economies to developing economies into consideration. It is important that China and its developed trade partners cooperate in reducing emission transfers.

Russia’s Global Value Chain Using Modified World Input-Output Data

In light of the growing trade in intermediate goods, the WTO, the OECD, and the United Nations are emphasizing the importance of the new concept of trade in value-added (TiVA) in place of the traditional gross trade. Using this new concept, the present study further develops the theoretical and empirical research on Russia’s global trade network as generated by value-added chains. Based on the global and local equilibrium conditions of a global input-output model, we prove the fundamental theorem on the relationship between gross trade balances in value-added and gross terms, namely that the sum total of a country’s trade balances with other countries in value-added equals that in gross terms. In other words, the sum total of the differentials between a country’s trade balances with other countries in both value-added and gross terms equals zero. Within this general identity condition, a bilateral value-added trade balance can be less than or greater than its corresponding gross trade balance, depending on intercountry sector-technical relations and sectoral value-added ratios. We also show the equivalence theorem between TiVA and the factor (value-added) content of trade proposed by Trefler. We employ a modified version of aggregated World Input-Output Data (WIOD) with eight countries/regions (BRIC, EU, United States, Japan, and the rest of the world [ROW]) and twenty sectors for 2005 and 2010. Modifications are performed to correct an underestimation of Russian oil and gas trade flows and the value-added ratios in the original data, which is essential to rightly understand Russia’s value chains with the EU and other countries.

The International Comparison Project as a source of private consumption data for a global input-output model

In 1989 a major project entitled ‘Strategies for Environmentally Sound Economic Development’ was inaugurated under the sponsorship of the United Nations. This project was designed to identify ways of alleviating pressures on the global environment and, at the same time, raise the standard of living of the poorest countries. The central component of its analytical framework is a dynamic global input-output model (GIOM) that describes trade between 15 regions in approximately 50 commodities, taking as its starting point the well-known 1977 World Input-Output Model of Leontief, Carter and Petri. The purpose of the present paper is 2-fold. Firstly, it describes a contribution to the compilation of a database for the GIOM. In particular, it draws on data collected by the United Nations' International Comparison Project (ICP) to provide estimates of private consumption expenditure for 1980, the base period for the model. Secondly, it uses these estimates as a case study to examine the implications of using different price systems for each country, rather than a common set of prices, to determine expenditures on composite commodities.