World Input-Output Database Research Articles

Fighting Alone or Mutual Benefit and Win? A Study on Forestry Embodied Energy Competition Network Based on MRIO

Abstract Measuring energy usage in the forestry trade is a topic of great significance. In this article, we use the World Input–Output Database and the multiregional input–output model to establish an embodied energy competition network and assess the influence of global value chain (GVC) integration on competition. The results show that (1) the intensity of competition for embodied energy in forestry is higher for exports compared with imports. Additionally, the import competition network exhibits lower connectivity and overall efficiency. (2) The core regions of the competitive network are primarily found in Europe, Asia, and the Americas. The United States consistently maintains a competitive advantage. However, forestry policies have led to a decline in the status of the United States, (3) The hierarchical structure of export competition is more pronounced. When the weighting degree exceeds 200, this phenomenon becomes more pronounced. (4) From the perspective of GVC, positive embedding in the GVC is negatively correlated with import competition. Backward GVC embedding is positively correlated with import and export competition. On the basis of the above results, this article proposes that countries where backward embedding is the main method should actively participate in building appropriate export international associations, participating in international organizations, and building a relatively harmonious and stable export competition market, thereby helping to maintain economic development and energy environment management.

A new approach for estimating trade elasticities and measuring the productivity effects associated with trade

Although there is an extensive literature on the measurement of total factor productivity (TFP) and its decomposition, the benefits of international trade for aggregate TFP have been less frequently studied. Combining the theoretical trade models and the so-called proxy-variable approach, this paper provides a new method for estimating trade elasticities based on a production model where trade elasticities and technological parameters are estimated simultaneously. Our proposed model is used to analyse the main determinants of the degrees of openness (embeddedness) of countries and sectors. Using data from the World Input-Output Database, we find that the pecuniary productivity gains attributable to embeddedness tend, on average, to offset its effect on sectors’ underlying productivity. We also use the model to measure the different factors affecting productivity changes due to the Covid-19 pandemic. We find that the trade-related consequences are important in explaining the contraction in countries’ productions.

Distribution margins and distribution-oriented FDI: Evidence from China

This paper constructs a new measure of distribution margins that covers more countries than that in the World Input–Output Database. Based on this measure, we develop a set of stylized facts and examine the effect of distribution margins on exporters' distribution-oriented foreign direct investment decision using customs data and foreign direct investment decision data from China. We find that higher distribution margins in destination countries drive exporters to conduct distribution-oriented foreign direct investment. Compared with specialized export intermediaries, manufacturers have a greater incentive to invest in distribution sectors abroad when faced with higher distribution margins.

The roots of carbon emission differences between China and USA: A quantitative study based on global value chains

China and the USA, as preeminent contributors to global carbon emissions, demonstrate discernible differentials in both magnitude and trajectories of their respective carbon outputs. This article employed two methods, Structural Decomposition Analysis (SDA) and Quantitative Structural Modeling, to scrutinize the underpinnings of these disparities through the lens of the global value chain. Drawing upon data from the World Input-Output Database (WIOD), our analysis revealed that the compounded influences of output composition, input intensity, input composition and input origin collectively elevated China's aggregate carbon footprint from 2000 to 2014, while the scale effect made China's carbon emissions lower than of the USA. Notably, China's carbon emissions surpassed those of USA, with the gap accentuating over time. The quantitative results of the structural model showed that the difference in carbon emissions between China and USA predominantly stem from disparities in productivity, production technology, factor intensity, factor endowment and direct carbon intensity. Differences in trade costs exhibited some discernible impact, their influence remains relatively marginal, whereas distinctions in consumption behaviors and trade imbalances minimally contribute to the observed differentials. These findings have important policy implications for global carbon reduction efforts and China's trajectory towards a low-carbon economic paradigm.

Delineating the embodied CO2 emissions in Canada's exports: Routes, drivers, and paths

AbstractThis study combined the World Input–Output Database and Asian Development Bank's Multiregional Input–Output database to investigate Canada's embodied CO2 emissions in exports (EEE) for the period of 2000–2018. We examined the key drivers and paths through structural decomposition analysis and structural path analysis. First, the results showed that embodied emissions in the intermediate exports were the major contributor to Canada's EEE, and emission paths involving more than three countries were on the rise, indicating that the expansion of the global industrial supply chains has complicated the paths of Canada's EEE. Second, the factors such as emission intensity of sectors, export structure, and export scale, had varying influences on Canada's EEE over time. For several sectors, the benefit from reduced emission intensity was largely offset by the additional emissions from the increased export scale. Hence, the design of emission regulations should consider the heterogeneity of industrial sectors in order to mitigate emissions for the diverse industries in Canada. Third, energy and resource industries (e.g., electricity, petroleum, wood, metals, and so on) played an essential role in Canada's exports. A significant amount of embodied emissions was transferred from these sectors to the downstream sectors along the supply chain, indicating that abatement measures should be adopted from the whole life cycle perspective of a product/service through an integrated governance of the supply chain. This article met the requirements for a Gold–Silver JIE data openness badge described at http://jie.click/badges.

Growth and distribution regimes under global value chains: Diversification, integration, and uneven development

This study investigates the macroeconomic interactions between productive structure and income distribution in the context of Global Value Chains (GVC). Our research goes beyond the traditional scope by presenting a detailed typology that examines how globalisation has amplified uneven development processes on a global scale. This in-depth exploration provides valuable insights into the intricate interplay between global economic integration and regional development disparities, thereby contributing to the broader understanding of growth and distribution in the context of globalisation. We propose a theoretical framework inspired by the Structuralist literature to identify three distinct regimes in globalised production chains: (1) a structure/diversification regime based on the Balance of Payments Constrained Model (BPCM) literature, (2) an integration regime derived from the GVC literature, and (3) a functional income distribution regime in open economies. We use Principal Component Analysis (PCA) to create indices (proxies) for each regime to then identify country patterns within a structured typology. We then analyse growth trajectories and estimate the causal relationship between these regimes and per-capita growth using multiple regression models – fixed effects (FE), instrumental variables (IV), and generalised method of moments (GMM). Our dataset includes data from 60 countries between 1995 and 2018, sourced from the World Development Indicators (WDI), World Input-Output Database (WIOD), Trade in Value Added (TiVA), and the Penn World Tables (PWT). This study significantly enhances the understanding of structuralist growth models by offering a comprehensive and unified narrative on the variety of economic growth regimes within Global Value Chains (GVCs).

Assessing Productive Structures in Brazil With Dynamic Time Varying Graphs

This paper uses time varying graphs to evaluate the Brazilian production structures, assessing the relationship across economic sectors overtime given important macroeconomic shocks in the country. We use the annual Brazilian input-output matrices from the World Input–Output Database for the period 1995–2011. Our results show possible positive impacts of macroeconomic policies and higher commodity prices on increased network connectivity between 2002 and 2003, the negative influence of the 2008 crisis resulting in decreased network connectivity, and the intensification of the connectivity of the food, petrochemical and metals, and machinery sectors. These results provide insights on how potential macroeconomic exogenous shocks and policies propagates through the national production structure.

The impact of industrial digitization on the global value chains position: Evidence from China’ s industry sectors

Industrial digitization (ID) has become a new driving force for high-quality development of industries. Existing studies have mainly examined the global value chains position (GVCP) in terms of openness and technological progress, and there are a few studies from the perspective of industrial digitization. This paper constructs an input-output model to measure the GVCP of China's industry sectors by use the world input-output database (WIOD), and empirically tests the impact of ID on the GVCP of China's industry sectors by constructing ID indicators. The conclusions of the study are shown below. First, ID significantly enhances the GVCP of China's industry sectors, which can drive the industry sectors to realize value chain climbing. Second, mechanism analyses shows that ID can enhance the GVCP by increasing export technology complexity and revealed comparative advantage of China's industry sectors. Third, ID mainly influences the forward production lengths, and ID boosts GVCP more significantly for technology-intensive and pollution-intensive sectors. Fourth, the economic consequences show that ID decreases energy intensity and labor employment by improving the GVCP of China's industry sectors. Based on the findings, we believe that upgrading the digitization of industry sectors is an effective measure to drive up the value chains.

Has GVC participation exacerbated inequality of the embodied carbon in fossil energy industry export trade?

Introduction: The fossil energy sector is an important part of international trade, and the flow of products between sectors will bring about the flow of embodied carbon. There are relatively few studies on embodied carbon in the fossil energy sector, which are mostly concentrated in other sectors and are not well integrated with GVC. Combining embodied carbon with GVC provides a better view of the allocation of environmental responsibility in trade. At the same time, it can also help different countries to improve the environment with the help of GVC.Methods: This research is based on the World Input–Output Database. First, by using multi-regional input–output, this paper measures fossil energy trade embodied carbon (FEE) data of 39 countries from 2000 to 2014; second, using structural decomposition analysis, we find what factors affect FEE. Finally, we analyze theimpact of global value chain (GVC) on the FEE.Results: This study obtained the following conclusions: 1) different GVCs have different effects on the embodied carbon in trade. Simple forward, complex forward, and simple backward to embedded play a positive role. The complex backward GVC has a negative impact; 2) high-income countries can get greater positive environmental effects through GVC, and middle-income countries cannot obtain or obtain less environmental effects; and 3) the backward GVC affects the FEE by affecting the proportion of fossil energy consumption.Discussion: The results show that the FEE shall be jointly responsible for the world’s countries, and different countries should make different contributions to the world’s environmental protection comprehensively considering factors such as the economic development level of various countries. This proposes relevant policy suggestions in China.

The effect of service outsourcing on labor income share: Measuring labor income share from the global value chains perspective.

Inspired by the positive impact of service outsourcing in Chery and other enterprises on human resources, this paper explores the impact of service outsourcing on labor income share. This paper introduces a framework to analyze how value added is distributed between capital and labor along the mix of inputs from different countries and sectors participating in global value chains and examines the effect of service outsourcing on the labor share income. Using the World Input-Output Database (WIOD) and OECD Inter-Country Input-Output (OECD- ICIO) table, this paper utilizes the WWZ decomposition method of global value chains (GVCs) to quantify labor share income. The results show that: (1) service outsourcing significantly contributes to the increase in labor share income; (2) Offshore outsourcing had a statistically stronger effect on labor share income after the financial crisis, both compared to the past and to onshore outsourcing; (3) Offshore outsourcing has a higher coefficient in countries with low technology. For ease of comparison, only onshore outsourcing shows a statistically significant difference among various service types; (4) The analysis using Chinese data reveals that the coefficient of offshore outsourcing is negative and statistically significant, indicating that industries with higher levels of service outsourcing have a lower labor share income.

Contribution of major economies to global GDP and product reallocation around the world

Economic globalization has led to production increasingly becoming concentrated in certain regions and countries of the world. This article develops an accounting framework to provide the trends for the contribution of countries to global gross domestic production (GDP). In particular, the method transforms the multiregional input-output model to quantify the relative importance of individual economies to world GDP. The proposal uses a world input-output database that distinguishes between three main economic areas: China, the United States of America and the European Union. The results suggest that identical changes in sectoral demand asymmetrically modify the relative contributions from individual economies, with China showing the highest positive (negative) impact after an increase (decrease) in world demand. These findings suggest that a generalized economic expansion (contraction) is linked to a boost (decline) in the asymmetries of production across the world.

Corporate Social Responsibility along the global value chain

Locating substantial parts of the production process in developing and emerging economies, many firms face an increasing demand by stakeholders for Corporate Social Responsibility (CSR) along their value chains. Contractual incompleteness between firms and their suppliers at different stages of production can exacerbate the ability to meet these demands. We analyze a model of sequential production with incomplete contracts where CSR by independent suppliers differentiates the final product in the eyes of caring consumers. Progressing down the value chain, our model predicts an increasing CSR profile from upstream suppliers with low CSR to downstream suppliers with higher CSR. We confirm this prediction using Indian firm-level data – computing a firm’s value chain position by combining its product-level sales information with the World Input–Output Database. We find that more downstream firms report higher CSR expenditures as measured by a combination of staff welfare spending and social community spending.

The European regions in the global value chains: New results with new data

AbstractThis article contains the methodology and main results related to the update and extension of the widest interregional input–output tables for the entire EU27, UK and the European Free Trade Association (EFTA) countries. This work continues the outstanding effort developed in the past years regarding the estimation and analysis of different multiregional input–output (MRIO) databases at the country level (world input–output database, EXIOBASE, ICIO, FIGARO, etc.) and the MRIO tables developed for the European Union (EU) at the NUTS2 level. The main contribution consists of updating and extending the current EUREGIO collection to obtain a EUREGIO table for 2017, which will be referred (NUTS‐2 Rev.2016) for all the EU27 + UK + EFTA countries and will be embedded in the new FIGARO multicountry 2017. Such effort was developed in the context of the ESPON‐IRIE project. This article summarises the methodology used and compares the results obtained with the ones of the main benchmarks, providing an analysis of the national and regional participation in the global value chains (GVCs). The main results suggest that, on average, 65% of value added is embodied in the goods and services sold to the same NUTS‐2 region, 16% is embodied in the ones sold to regions in the same country and the remaining 20% is exported (to other countries). Exploring the heterogeneity within these figures can also be seen that the variety is higher across regions than across sectors. Our analysis suggests that, to a large extent, the heterogeneous participation of EU27 + UK + EFTA regions in the GVCs is explained by their sectoral structure more than by the regional idiosyncratic characteristics. Such results open the floor for the correct design of industrial policies, embedded in the smart specialisation paradigm.

Multipliers and Supermultipliers in a Multisectoral Framework: Macroeconomic Tools After All?

ABSTRACT The paper starts showing that the common mistake of considering Keynesian income and/or employment multipliers as sector-specific, in a multisectoral framework, is taking its way back into economics. The phenomenon coincides with the recent debate about the macroeconomic Sraffian supermultiplier and generates some new miscommunication by using similar terminology to sectoral multipliers. Thus, the aim of bringing forward the understanding that Keynesian multipliers and Sraffian supermultipliers constitute macroeconomic relations even in multisectoral models is pursued by emphasising the differences between the traditional input–output multipliers and their Keynesian counterparts and by showing the required adaptations for supermultiplier representations. Once aggregate multipliers and supermultipliers are obtained, there is no need for further multisectoral operations and all the differences in impact between economic activities must be attributed to the simple input–output multipliers. Some estimates are presented using data from the World Input-Output Database (WIOD).

The impact of global value chain embedding on the upgrading of China’s manufacturing industry

In the current international trade characterized by global value chains (GVCs), to improve the trade interests of China’s manufacturing industry and change the unfavorable situation of “big but not strong,” industrial upgrading is an important issue that needs to be solved urgently. Based on the analysis of the impact of embedding in GVCs on the acquisition of trade benefits, the paper empirically tests the impact of embedding GVCs on manufacture upgrading by using industry segmentation data of China’s manufacturing industry from the year 2000 to 2014 in the world input–output database. The research shows that 1) from 2000 to 2014, forward and backward participation increased from 11.2% and 15.2% to 14.6% and 15.9%, respectively; China’s manufacturing industry mainly participates in the GVC in a backward way, which significantly improves trade interests; 2) both forward participation and backward participation in the GVC are conducive to the increase of trade benefits and are positive at the 5% level, which has a significant driving effect on the upgrading of the manufacturing industry; and 3) heterogeneity testing shows that capital-intensive, technology-intensive, and high-tech industries gain significant trade benefits, and embedding GVCs is more conducive to upgrading. Therefore, integrating into the GVC at a higher level is the direction to promote the upgrading of China’s manufacturing industry.

Revisiting the Role of Imported Inputs in Asian Economies

Purpose - Global production chains and their impacts on economic growth have drawn extensive attention from researchers. Close relationships among global production chains, export and economic growth have been illuminated, as evidenced by the fast and stable economic growth of East Asian economies. These economies perform various roles within global production chains using offshoring, in which the impact of import on domestic gross output is as strong as that of export. The impact of import on economic growth would depend on whether imported inputs substitute or complement domestic inputs production, which is likely to vary according to individual countries' functions within global production chains. The economic growth of concerned countries would also be diverse. However, little attention has been paid to the impact brought by imports compared to its significance.
 Design/methodology - The principal methodology used in this paper is structural decomposition analysis (SDA), widely chosen to elucidate the impact of various factors on domestic gross output using input-output tables. This paper extracts trade data of six Asian economies from the World Input-Output Database (WIOD) 2016 release that covers 43 countries for the period 2000-2014. The extracted data is then categorised into 37 sectors. First, this paper calculates the Feenstra-Hanson Offshoring Index (OSI) of each country. It then applies SDA to measure the changes in each economy's gross output, export, import input coefficients, and domestic input coefficients. Finally, after taking the first difference from pooled time-series data, it estimates the correlations between imported input coefficients and OSI using the ordinary least square (OLS) method.
 Findings - The main findings of this paper can be summarised as follows. Firstly, all six countries have increasingly engaged in global production chains, as evidenced by the growing size of OSI. Secondly, there are negative correlations in five countries except Japan, with sectoral differences. Thirdly, changes in import input coefficients are not negative in all six countries, indicating that offshoring does not necessarily substitute for domestic inputs production but does complement it and, therefore, fosters their economic growth. This is observed in China, Indonesia, Korea and Taiwan. Offshoring has led to an increase in the use of imported inputs, which has, in turn, stimulated domestic inputs production in these countries.
 Originality/value - While existing studies focus on the role of export in evaluating the impact of participating global production chains, this paper explicitly examines the unexplored impact of import on domestic gross output by considering both the substitution and the complementary effect, using the WIOD. The findings of this paper suggest that Asian economies have achieved fast and stable economic growth not only through successful export management but also through effective import management within global production chains. This paper recommends that the Korean government and enterprises carefully choose offshoring strategies to minimise disruption to domestic production chains or foster them.

Labor market distortions in major emerging-market economies: Some CGE estimates

Purpose ― In the present study, the effects of labor market distortions on economic structure and efficiency are estimated for seven emerging-market countries: Brazil, China, Indonesia, India, Mexico, Russia, and Turkey. Methods ― The estimates are based on a computable equilibrium (CGE) model that allows simulation of the inter-industry links of 56 industries plus a sector representing the rest of the world from data collected in the World Input-Output Database (Release 2016) for the period 2000-2014. Findings ― The results show that wage differentials appear to be distortionary, especially in the cases of countries with high wage-income inequality. Moreover, it seems that labor market distortions in emerging-market countries are subject to the rural-urban dichotomy and urban labor-market imperfections. Finally, the results show that the removal of wage differentials affects the terms of trade, which are improved in most but not all cases.Implication ― The conclusions of the present study have policy implications. In countries where the rural-urban dichotomy is the main distortion in labor markets, increasing urbanization can stimulate efficiency; when this is not the case, further reform of urban labor markets is needed. However, it cannot be ruled out in advance that a policy aimed at enhancing labor mobility may have a negative impact on the terms of trade. Originality ― The estimation method used in the present study presents certain advances over others found in the literature, as it becomes possible to estimate the effects of labor-market distortions while considering the interdependencies between different sectors, as well as to plausibly estimate the effects on trade. The present study also uses a large quantity of data, which is expected to add robustness to the study’s conclusion.

Sensitivity analysis of shock distributions in the world economy.

With the ever increasing interconnectedness among countries and industries, globalization has empowered economies and promoted international trade, capital flow and labor mobility, leading to improved products and services. However, the growing interdependence has also propelled an inherent reliance on joint cooperation which has considerably influenced the complexity of global value chains (GVCs). This plays a significant role in policy decisions, raising questions about trade risks that originate from such interdependence. In this paper, we study the impact of network linkage disturbances on the output supply and input demand of countries. We model the network interconnectedness of countries according to the latest 2016 release of the World Input-Output Database (WIOD) that includes data tables for the period 2000-2014 covering 43 countries as well as a model for the Rest of the World (ROW). We assess the shock distributions across the world economy by quantifying the changes in the network linkages using sensitivity analysis. Our contribution is in the definition of a shock tensor with the purpose of evaluating the impact of link sensitivity. The shock tensor is a straightforward yet comprehensive tool that allows us to obtain ample results at various levels of granularity when combining it with aggregation operators. Our study introduces a novel methodology that enables us to acquire input and output link sensitivities for all country pairings when an economic shock initiates or concludes within a country of interest. This innovative approach also facilitates the analysis of evolving trends in these link sensitivities, providing a comprehensive understanding of the dynamics of shock propagation across the global network. Taking advantage of the time-series nature of the WIOD, our results reveal illustrative visualizations and quantative measures that characterize patterns of shock distribution and relationships among countries throughout the period from 2000 to 2014. Our methodology and results not only uncover valuable trends but also establish a structured approach to better understand the aggregate effects of shock distributions. Thus, this study could be helpful for policy makers to assess trade relationships between countries and obtain quantitative insights for making informed decisions as well as explore the overall state of the globalization as a whole.

Productivity and Global Value Chains: A Tale from the Indonesian Automobile Sector

Low productivity and quality of employment have always been a big problem in Indonesia, caused by the lack and mismatch of skills in the workforce. Labor productivity (LP) describes the company’s ability to produce something. This can be determined by added value or output. Several factors influence LP, such as education, age, and training. The concept of global value chains (GVCs) has become an integral part of economic activity, and trade within global production networks has grown more rapidly than conventional trade in final goods. GVCs have both positive and negative impacts on employment opportunities. The automotive industry is categorised as one of the ten primary priority industries in the Indonesian manufacturing sector. This research analyses the impact of LP on GVC integration in the Indonesian automotive industry. The data used in this research comes from the World Input–Output Database (WIOD) and the Central Statistics Agency (BPS) from 1995 to 2014. The variables used include the number of workers, added value, real wages, and GVC, which were calculated by the author using the Inter-Country Input–Output (ICIO) approach. Using ICIO analysis, the following matrix should be constructed to determine involvement in GVCs. This research shows that LP in the Indonesian automotive industry has a positive trend, and the GVC position in the Indonesian automotive industry has a positive trend line. The domestic value chain increased from 4% to 33%. This improves the ability to produce higher value-added and intermediate export goods. LP increases the domestic value chain in the Indonesian automotive industry, leading to global value chain integration. Thus, LP goes hand in hand with integrating GVCs.

The impact of digital inputs on pollution reduction in Chinese manufacturing enterprises

Facilitating pollution reduction in manufacturing enterprises is crucial for implementing the new development concept and achieving sustainable, environmentally friendly growth. This research delves into the influence of digital inputs on pollution emission reduction in Chinese manufacturing enterprises. The study utilizes a combination of the World Input-Output Database, the Chinese Industrial Enterprises Database, and the Chinese Industrial Enterprises Pollution Emission Database covering the period from 2000 to 2012. The findings reveal that digital inputs make a significant contribution to pollution reduction in Chinese manufacturing enterprises. Specifically, digital software inputs and foreign digital factor inputs display more pronounced effects on pollution reduction. The analysis of the mechanism reveals that the pollution reduction effects of digital inputs in manufacturing enterprises can be attributed to several effective mechanisms: the enhancement of energy efficiency, technological innovation, and servitization, as well as the crowding-out effect of pollution control investment. The former mechanisms demonstrate a promoting effect, while the latter exhibits an inhibiting effect. The impact of digital inputs on pollution reduction in manufacturing enterprises displays heterogeneity, with a more significant emission reduction effect observed in industries facing higher environmental regulatory intensity, digitization-unrelated industries, non-state-owned firms, and firms with higher levels of financing constraints. These findings offer empirical evidence and serve as a policy foundation for promoting digital transformation and achieving green economic development in China.