Value-added Exports Research Articles

Impact of Deep Preferential Trade Agreements on Bilateral Value-Added Exports

ABSTRACT This study investigates the impact of deep preferential trade agreements (PTAs) on bilateral value-added exports. The results indicate that deeper PTAs increase bilateral exports through reducing the trade costs and the improvement in the partner country’s governance could also promote it. The heterogeneity analysis shows that the impact of PTAs on higher-income countries is mostly driven by WTO-X clauses. Deep PTAs are more effective for countries with lower policy adjustment costs or better rules of law. This study is important for understanding the effect of PTA provisions on trade and provides a theoretical reference for countries to improve trade policies.

Regional Comprehensive Economic Partnership Can Boost Value-Added Trade in Food and Non-Food Sectors in Asia-Pacific Economies.

This study examines the effects of the Regional Comprehensive Economic Partnership (RCEP) on the value-added trade of food and non-food sectors. This study uses a global computable general equilibrium (CGE) model coupled with an extension module for the origin decomposition of value-added flows embodied in gross trade. The results suggest that by cutting down tariff and non-tariff barriers, the RCEP would significantly stimulate the economies of and gross trade among Asia-Pacific countries involved in the agreement. The potential benefits of the RCEP will be overestimated if we ignore the origin of value added and measure the benefits by gross exports. The domestic components of bilateral value-added flows between RCEP members would increase greatly, indicating an increasingly integrated value chain between RCEP members. Import taxes and non-tariff barriers for processed food, textiles and clothes, and heavy manufacturing are relatively significant in the region, so the RCEP would significantly improve their value-added exports. The domestic component of value-added exports in agricultural products and processed food from RCEP members would be increased significantly, indicating that the closely integrated food value chain boosts the food economies of RCEP members.

Global value chains before and in times of the COVID-19 pandemic

Abstract This paper aims to examine the changes in global value chains (GVCs) in the years 2020–2022 (times of the COVID-19 pandemic) compared to 2019 (last year before the pandemic). GVCs are illustrated by diagrams based on the statistics on international trade measured by value-added exports and imports. In this paper, the final demand approach is applied to measure international trade by value-added exports and imports and they were computed based on inter-country input-output tables delivered by the Asian Development Bank (ADB). The catchphrase “Made in the World” makes an impression, but in reality, value chains are rarely global. They are rather regional with three centers. “Factory Europe”, “Factory Asia”, and “Factory America” can easily be identified in the years 2019–2022 as there were three large regional supply hubs in GVCs: Germany, China, and the United States. When the years 2020–2022 were compared to 2019, “Factory Asia” with center in China elevated their position in GVCs at the expense of “Factory Europe” with center in Germany and “Factory America with center in the USA.”

Sourcing Inputs from China for Central and Eastern European Countries' Exports

Abstract: This article highlights the role of sourcing inputs from China for Central and Eastern European (CEE) countries' exports and sheds light on the rising trade deficit between China and the se countries. Research findings on gross and value-added trade panel data for 12 CEE countries suggest that a 10 per cent increase of imported capital inputs from China would cause an overall increase of 2.4 per cent in CEE exports. The effect is more pronounced for both intermediates and capital inputs imported from China, taking domestic value-added exports into consideration. By taking into account the possible endogeneity in baseline regression and the COVID-19 pandemic as an instrument of supply shock for imports from China, findings affirm that sourcing from China has promoted significantly CEE countries' gross exports as well as domestic value-added in exports. Moreover, the export boosting effect affects significantly the intensive margin. This article has rich policy implications for CEE countries to improve trade deficits with China.

THE EFFECTS OF INTERNATIONAL LOGISTICS IN GLOBAL VALUE CHAIN TRADE

The current empirical literature shows that logistics plays a vital role in increasing the total volume of international trade. However, there is scarce literature on the impact of logistics performance on global value chain trade. Therefore, the objective of this paper is to investigate the effect of logistics performance on global value chain trade, measured by the value-added exports. The empirical specification of this paper is based on the structural gravity model of international trade. The analysis is based on biennial panel data on bilateral trade flows for the EU-15, CEE, and the Western Balkans and covers the period from 2010 to 2018. The model is estimated with a Poisson Pseudo Maximum Likelihood Estimator. The results show that logistics performance appears to have significant positive effects on global value chain trade and that the logistics performance of the partner country plays a more critical role than the logistics performance of the reporting country. Institutional quality matters greatly for global value chain trade. Individual differences in the observed variables were found between selected groups of countries. The need to improve logistics performance and invest in knowledge and technology will help countries improve in value chains, along with adequate institutional support.

Impact of digital services trade restrictiveness on manufacturing export efficiency

ABSTRACTBased on the application of the stochastic frontier analysis (SFA), this article examines the impact of digital services trade restrictiveness (DSTR) on the total export efficiency and domestic value-added (DVA) export efficiency of manufacturing industries in 46 economies from 2014 to 2019. Results show that DSTR in exporting economies have a negative impact on all types of export efficiency, whereas DSTR in importing economies have a negative impact solely on the efficiency of total exports and final goods exports. Further researches indicate that the impact of DSTR is mitigated in exporting economies with larger information and communication technology (ICT) infrastructures, such as international bandwidth and mobile cellular. From the perspective of multiple policy areas, the DSTR of infrastructure connectivity, electronic transactions, and other barriers reduce the total export efficiency. However, only the DSTR of these areas in exporting economies significantly affect DVA export efficiency. Overall, our findings can inspire economies to adopt more precise and scientific trade policies while participating in the governance of digital services trade and supporting the growth of higher-quality manufacturing exports.

Where Does Value-Added Flow in Gross Exports, Mr. Newton? Global Supply Chains and New Regionalization's Effects in the Asia-Pacific

The New Trade Theory proposes that participating in global supply chains (GVCs) enhances productivity and economies of scale. However, recent events like the COVID-19 pandemic and Ukraine crisis have exposed the vulnerabilities of GVCs to global risks. This study investigates the relationship between gross exports and the domestic value-added content of such exports, considering various factors, including labor productivity, especially in Belt and Road Initiative countries (A-P Belt and Road Initiative [BRI]). We analyze the role of GVCs using cross-sectional and panel data from the 2021 OECD Trade in Value-Added. Over the period from 2009 to 2018, we observed that countries with increasing productivity exported goods, services, and value-added to other countries experiencing similar productivity. Our findings indicate that export concentration contributes to increased value-added exports. However, we could not validate the effects of R&D spending, the real effective exchange rate, foreign direct investment inflows, and A-P BRI membership contributions using the difference-in-differences method.

Strategic Trade Policy for Pakistan’s Textile Sector in 2018: Enhancing High Value-Added Exports through Low-Priced Intermediate Input

Strategic Trade Policy for Pakistan’s Textile Sector in 2018: Enhancing High Value-Added Exports through Low-Priced Intermediate Input

FDI, international trade and global value chains (GVCs): India's GVC participation, position and value capture

Using OECD Trade in Value Added (TiVA) database (2021, 2022) and Asian Development Bank (2022) dataset, this paper indicates that though India's GVC participation rate has risen over time, it was lower than that of several economies in Asia-Pacific and its relative share in participation gains was marginal. Nevertheless, India's relative share in forward and backward GVC content to (and from) the region was not as peripheral. Raising net participation gains will require key enablers, and stimulating the mutually reinforcing FDI-GVC relationship by attracting quality FDI inflows. Findings based on the panel, fixed-effects model support the hypotheses that production-based GVC participation, revealed comparative advantage based on value-added exports, the country's relative economic size, and economic complexity (in medium-to-high technology manufacturing sectors) positively affect economic upgrading through capturing a greater share in world's domestic value-added in an industry while relative GVC position has a negative effect.

한국 주요 산업의 GVC 현황과 쟁점

The recent GVC disconnection caused by the Russia-Ukraine war, COVID-19, US-China hegemony and technology competition requires strategic policy establishment and preparation at the national level as it goes beyond firm-level response capabilities. Since transactions under already established supply chains still account for a significant portion of trade in the perspective of firms, based on diagnosis and objective understanding of the current status, efforts are required to actively respond to changes in the global economic-security and industrial environment. Therefore, this study analyzes the current status of GVC, focusing on the electronics and automobile industries, which are the main industries that contribute the most to Korea's domestic value-added exports, and summarizes the implications related to GVC restructuring to respond to the changing trade environment.
 This study uses ICIO (2021), the most up-to-date data as of 2023, to analyze the results of value-added export decomposition of Korea's main export industries, electronics and automobiles. In particular, the study is meaningful in that it links recent changes centered on the US-China in the macro policy environment (country-industry) to the implications of the microscopic aspect (industry-item).

Evolution of the bilateral trade situation between Belt and Road countries and China

The Belt and Road Initiative's (BRI) potential impact on bilateral trade between Belt and Road countries (BRCs) and China is hotly contested. It is crucial to clarify what changes in the trade situation of China-BRCs bilateral trade before and after the BRI, including economic gains and environmental costs. This study applies the decomposition of production activities method to calculate the value-added (VA) and embodied CO2 emissions (ECE) transfer in China-BRCs bilateral trade from 2004 to 2017. The relevant results are fourfold. (1) The growth rates of China's VA exports and ECE exports to the BRCs are 1.44 times and 1.36 times higher than the growth rates of imports. (2) Electricity, iron and steel, and chemical rubber products are the main sectors of China's ECE exports. The oil industry is the main industry of BRCs' VA exports. (3) From 2004 to 2017, China's bilateral trade with most of the BRCs exchanged net ECE for net VA. Compared with traditional trade, China is gradually losing net benefits in VA for reducing the net costs of ECE under GVC activities. (4) The embodied CO2 intensity (ECI) of China-BRCs bilateral trade is decreasing, and the ECI of China's exports to BRCs is 2.11 times of imports. The primary driver of a decline in ECI is the CO2 emissions coefficient. These findings demonstrate that the BRI has had a positive impact on the China-BRCs bilateral trade and GVC activities leading to cleaner exports from China and BRCs. The research comprehensive analysis framework of economic and carbon emissions of cross-border trade established in this study provides a methodological basis for subsequent studies of other environmental indicators.

Green steel: Synergies between the Australian iron ore industry and the production of green hydrogen

Green steel, produced using renewable energy and hydrogen, presents a promising avenue to decarbonize steel manufacturing and expand the hydrogen industry. Australia, endowed with abundant renewable resources and iron ore deposits, is ideally placed to support this global effort. This paper's two-step analytical approach offers the first comprehensive assessment of Australia's potential to develop green steel as a value-added export commodity. The Economic Fairways modelling reveals a strong alignment between prospective hydrogen hubs and current and future iron ore operations, enabling shared infrastructure development and first-mover advantages. By employing a site-based system optimization that integrates both wind and solar power sources, the cost of producing green steel could decrease significantly to around AU$900 per tonne by 2030 and AU$750 per tonne by 2050. Moreover, replacing 1% of global steel production would require 35 GW of well-optimized wind and solar photovoltaics, 11 GW of hydrogen electrolysers, and 1000 square kilometres of land. Sensitivity analysis further indicates that iron ore prices would exert a long-term influence on green steel prices. Overall, this study highlights the opportunities and challenges facing the Australian iron ore industry in contributing to the decarbonization of the global steel sector, underscoring the crucial role of government support in driving the growth and development of the green steel industry.

디지털화가 한국 부가가치수출에 미치는 영향 실증분석

디지털화가 한국 부가가치수출에 미치는 영향 실증분석

Global textile and apparel value-added exports network structure and China’s network position

ABSTRACT By taking the textile and apparel value-added exports data of 43 economies as the research sample, the social network analysis method is used to measure the global textile and apparel value-added exports network structure. The results show that the world textile and apparel value-added trade network is uneven, China has the widest range of trading partners, and the breadth of trading partners is growing over time. Germany and Italy have a stronger ability to control trade among other economies, and China’s ability to control trade with other economies is generally average, but the gap between China and Germany or Italy has narrowed significantly. China’s core degree has risen sharply. The trade networks are concentrated in a small number of core zone countries. The small group located in China is characterized by contraction.

Impact of ICT on regional supply chains in CEECs

Purpose: This paper aims to examine the impact of information and communication technologies and their availability in the Central and Eastern European countries that are members of the EU on regional value chains and regional supply chain management and logistics in CEECs in the context of the growing e-commerce industry.Methodology: We used a balanced data panel of 11 countries over 9 years (2011-2019) to examine the impact of ICT indicators on regional supply chains. Th e analysis included the ordinal Spearman rank correlation coefficient and the panel GMM method, which accounts for endogeneity. We implemented the Arellano-Bond estimator within the GMM framework, considering the ordinal nature of the dependent variable. This approach allowed for an effective analysis of the complex relationships in the data, considering the panel structure and the individual country observations.Results: The findings indicate that the hypothesis claiming that the integration of digital technologies in supply chains in CEEs leads to statistically significant improvements in efficiency, controllability, and cost-effectiveness, cannot be rejected. Enhanced communication, collaboration, and overall logistics performance have led to increased customer satisfaction. Additionally, the study shows a positive correlation between ICT infrastructure and logistics performance, emphasizing the crucial role of digital innovations in shaping supply chain dynamics.Conclusion: Th e study supports the hypothesis that integrating digital technologies into supply chain management in Central and Eastern Europe is associated with enhanced efficiency, resilience, and economic integration through value-added export. Th ese insights offer pathways to foster economic integration in the region.

Fields of harmony: trade standards and China’s value-added exports in global value chains

This study uses a gravity model to analyse the effects of different trade standards on China’s value-added and total exports in global value chains (G.V.C.s). The results indicate that harmonisation with international standards promotes both types of exports in China. Hence, the country should not neglect the implementation of standards. Mandatory standards have a greater impact on exports than voluntary standards. In addition, mandatory internationally harmonised standards have a greater trade promotion effect on total exports than on value-added exports. Voluntary country-specific standards have a greater trade inhibiting effect on value-added exports than on total exports. Voluntary internationally harmonised standards do not show statistically significant impacts on either export type. Therefore, emerging economies should optimise the scale and structure of standards, ensure their implementation, and improve their international harmonisation to promote exports and reap the benefits of joining G.V.C.s.

Dominant Currency and Value-Added Exports

This study investigates the real effects of exchange rate changes on exports with three key features; pricing in a dominant currency like the US dollar, imported intermediary use in production, and exports dependent on major demanded countries. We test the longitudinal effects of exchange rates using a data set of both gross and value-added bilateral exports. The key finding distinguishes the positive panel effect of US dollar depreciation due to the dollar liquidity effect from the negative panel effects of other currencies depreciations due to the intermediary import effect. The two detailed results stand out mostly due to the impacts of intermediate goods imports. First, the panel effect of currency depreciation on value-added exports is smaller than gross exports. Second, the panel effect of depreciation on intermediary goods exports is bigger than final goods exports. Also, the panel effects of income and exports-FDI feedback are significant, enriching for the relationship between trade flows and foreign investment.
 
 
 Received: 29 April 2022 / Accepted: 9 August 2022 / Published: 2 September 2022

IT 서비스업의 글로벌 무역 네트워크 및 부가가치 무역의 특징 분석

Purpose: In order to take into account the importance of the IT services industry related to the 4th industrialrevolution and to supplement the limitations of the export/import analysis based on gross export statistics, weattempted to analyze the status and features of the value-added export network of IT services industry. Through thetrade network analysis, we suggest the necessity of policies to foster the IT service industry and provide policyrecommendations for industrial development. Research design, data, and methodology: This study uses the 2005 and 2014 World Input-Output Table (WIOT) todecompose gross exports into value-added exports according to gross exports decomposition methodology. We thenobtain the world trade matrix based on the domestic value-added statistics. By applying network analysismethodology to the world trade matrix, the characteristics and changes of the global value-added trade in IT servicesindustry were identified through centrality analysis and core-periphery analysis. In addition, this study identified thestatus of Korea and Japan’s IT services industry in the world value-added trade network. Results: The countries with the greatest influence in terms of domestic value-added exports in the IT services industryare the European Union (EU), the United States (USA), the United Kingdom (GBR), Canada (CAN), and India (IND). Incontrast to the IT manufacturing industry, where Korea, Japan, and China were among the core countries, Korea,Japan, and China were not among the core countries and remain as peripheral countries in the IT services industry. The ratio of domestic value-added exports to gross exports in Korea’s IT services industry is lower than that of theEU, USA, Japan, and China, and the ratio of foreign value-added exports to gross exports is higher than that of theUSA, Japan, and China. This fact can be seen as a structure in which Korea’s IT services firms import and inputintermediate goods from abroad and then export the processed final goods to the global market. Implications: Since the early 2,000s, Korea’s IT industry’s production and exports have grown significantly in volume, and its influence has been greatly strengthened in the global IT market. However, the strengthening of Korea’s influence on the global trade in the IT industry is mainly due to the growth of IT manufacturing industry, and the competitiveness imbalance between IT manufacturing and IT services industry is very severe. Therefore, it is necessary to take measures to strengthen the competitiveness of Korea’s IT services industry. First, it is necessary to overcome the foreign value-added import - processing production structure and strengthen value-added production capacity by investing in the improvement of human capital and technology in the IT services and software fields. Second, it is necessary to promote the globalization of firms through export support measures for the IT services industry. In fact, while major Korean firms have IT services affiliates, the sales of these affiliates are stable, and there is no incentive for overseas expansion. Export incentives for IT services firms should be developed to stimulate their overseas expansion.

미중 디커플링의 GVC 파급영향 추정

Purpose : US policy towards China now focuses on decoupling. Due to decoupling, the supply chain based on the existing global value chain (GVC) will have to be adjusted to a large extent, and the production network in Asia, centered on China, will be reorganized. Research design, data and methodology : This paper is the first to quantitatively estimate the effect of the US decoupling policy. Decoupling will seriously hit the backward and forward linkages of China's GVC, but US GVCs will not be significantly affected. Results : Due to decoupling, Korea’s exports of intermediate goods to China will likely be greatly reduced, and value-added exports will decrease by US$65.7 billion to US$120.5 billion. Conclusions : The GVC impact analysis in this paper shows Korea should seek an active industrial policy to strengthen forward linkages while minimizing backward linkage losses.

Global Value Chains Participation during the COVID-19 Pandemic: A Dynamic Panel Approach

In recent decades, the emergence of global value chains (GVCs) has changed international trade patterns. Today, the production of goods involves international production sharing, which allows countries to trace the value-added distribution to international trade. However, the COVID-19 pandemic has lowered the trade intensity between countries and can disrupt many sectors. This study uses a dynamic panel approach with the generalized method of moments estimator to investigate the pandemic’s impact on GVC participation. We also investigate whether gross domestic product (GDP) per capita may influence GVC participation, and use institutional quality as control variables. We used the Asian Development Bank Multi-Regional Input-Output (ADB MRIO) data for the 2010–2020 period. We employ backward and forward linkage approaches based on value-added exports to address the overvaluation problems in gross exports. The empirical results illustrate that the COVID-19 pandemic led to a decrease in GVC participation, on average. Furthermore, GDP per capita plays a significant role in GVC participation in backward and forward linkages with higher-quality institutions.