Accounting of Value Added in International Trade

Higher School of Economics Economic Journal, Vol. 18, No. 4, pp. 645-680, 2014

36 Pages Posted: 20 Dec 2014

See all articles by Kirill Muradov

Kirill Muradov

Ministry of Industry and Trade - Centre for Information and Analysis of Foreign Trade

Date Written: October 1, 2014

Abstract

Gross exports accounting is a novel sub-area of research that seeks to allocate the value added in gross trade flows to its true country and sector of origin and country or sector of destination. Various frameworks have been recently proposed to perform such decompositions. This paper presents another effort to generalise the accounting framework so that it may be easily interpreted, customised and implemented in matrix computation software. The principal contribution is therefore a relatively simple way to derive the formulae for the decomposition of cumulative value added flows embodied in international trade. The underlying accounting approach is found to be largely similar to that of [Koopman et al., 2012; Stehrer, 2013], but the block matrix formulation allows the user to simultaneously decompose all bilateral flows at the country and/or sectoral level. The refined framework is applied to describe Russia’s export performance from the global value chain perspective using the data from the World Input-Output Database (WIOD) for 2000 and 2010. According to the findings, the countries that directly receive most of Russia’s exports are not exactly those that use most of Russia’s value added. Russia’s mining sector is found to be an intrinsic part of a complex downstream value chain where it indirectly contributes value to partner exports.

Keywords: gross exports accounting; value added in trade; global value chains; inter-country input-output tables

JEL Classification: D57, F15

Suggested Citation

Muradov, Kirill, Accounting of Value Added in International Trade (October 1, 2014). Higher School of Economics Economic Journal, Vol. 18, No. 4, pp. 645-680, 2014, Available at SSRN: https://ssrn.com/abstract=2540420

Kirill Muradov (Contact Author)

Ministry of Industry and Trade - Centre for Information and Analysis of Foreign Trade ( email )

No.25, bldg 1, Bolshaya Serpukhovskaya Street
Moscow, 115093
Russia

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