Measuring Trade in Value Added with Firm-Level Data

41 Pages Posted: 14 Jan 2020 Last revised: 11 Feb 2021

See all articles by Rudolfs Bems

Rudolfs Bems

International Monetary Fund (IMF); European Central Bank (ECB)

Ken Kikkawa

University of British Columbia (UBC) - Sauder School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 2020

Abstract

Global Value Chains have proliferated in economic policy debates. Yet a key concept-trade in value added-is likely mismeasured because of sectoral aggregation bias stemming from reliance on input-output tables. This paper uses comprehensive firm-level data on domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added. The magnitude of the bias varies across countries-at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firms' import and export intensities and size determine the magnitude of the bias.

JEL Classification: E01, F14, L14

Suggested Citation

Bems, Rudolfs and Kikkawa, Ken, Measuring Trade in Value Added with Firm-Level Data (January 2020). CEPR Discussion Paper No. DP14281, Available at SSRN: https://ssrn.com/abstract=3518622

Rudolfs Bems (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Ken Kikkawa

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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