Internal and International Vertical Specialization – Estimations for Brazil and new Approach to Gravity Models
Annual Doctoral Conference of the Association for the Development of Research in Economics and Statistics (ADRES). Strasbourg, January 2013
37 Pages Posted: 28 Feb 2014
Date Written: 2013
WTO, OECD with many others, suggest the trade in value-added would be a “better” measure to understand the impact of trade on employment, growth, production etc. when import content in exports is important. We use in this work an Input-Output table for 2008, to calculate the value-added exported by Brazilian states. We distinguish the value-added exported directly by the state itself or indirectly via other states. First, by using value-added we define the extent of vertical specialization among Brazilian states. Exported value-added are then used in a gravity model to determine the structure of trade in value-added terms. We also define a trilateral gravity structure which permits to control for the vertical specialization between states and to estimate the trade determinants at three steps: origin state, re-exporter state and importer country.
Keywords: Vertical Specialization, Input-Output Analysis, Gravity Model, Brazil, intra-national trade
JEL Classification: F02, F15, R12, R15
Suggested Citation: Suggested Citation