Fragmentation and Trade in Value Added Over Four Decades

62 Pages Posted: 22 Jun 2012

See all articles by Robert C. Johnson

Robert C. Johnson

University of Notre Dame - Department of Economics

Guillermo Noguera

Columbia University

Date Written: June 2012

Abstract

We combine data on trade, production, and input use to compute the value added content of trade for forty-two countries from 1970 to 2009. For the world, the ratio of value added to gross trade falls by ten to fifteen percentage points, with two-thirds of this decline in the last two decades. Across countries, declines range from zero to twenty-five percentage points, with large declines concentrated among countries undergoing structural transformation. Across bilateral trade partners, declines are larger for nearby partners and partners that adopt regional trade agreements. That is, both policy and non-policy trade costs shape production fragmentation.

Suggested Citation

Johnson, Robert C. and Noguera, Guillermo, Fragmentation and Trade in Value Added Over Four Decades (June 2012). NBER Working Paper No. w18186. Available at SSRN: https://ssrn.com/abstract=2089258

Robert C. Johnson (Contact Author)

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

Guillermo Noguera

Columbia University ( email )

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