How Global are Global Value Chains? A New Approach to Measure International Fragmentation

27 Pages Posted: 13 Jan 2015

See all articles by Bart Los

Bart Los

University of Groningen - Faculty of Economics

Marcel P. Timmer

University of Gronigen - Faculty of Economics

Gaaitzen de Vries

University of Groningen

Date Written: January 2015

Abstract

Denser networks of intermediate input flows between countries suggest ongoing international fragmentation of production chains. But is this process mainly taking place between countries within a region, or is it truly global? We provide new macroeconomic evidence by extending the Feenstra and Hanson ([Feenstra, Robert C., 1999]) measure of fragmentation to a multicountry setting. We derive the distribution of value added by all countries involved in the production chain of a particular final good. This is based on a new input–output model of the world economy, covering 40 countries and 14 manufacturing product groups. We find that in almost all product chains, the share of value added outside the country‐of‐completion has increased since 1995. This is mainly added outside the region to which the country‐of‐completion belongs, suggesting a transition from regional production systems to “Factory World.” This tendency was only briefly interrupted by the financial crisis in 2008.

Suggested Citation

Los, Bart and Timmer, Marcel P. and Vries, Gaaitzen de, How Global are Global Value Chains? A New Approach to Measure International Fragmentation (January 2015). Journal of Regional Science, Vol. 55, Issue 1, pp. 66-92, 2015, Available at SSRN: https://ssrn.com/abstract=2548812 or http://dx.doi.org/10.1111/jors.12121

Bart Los (Contact Author)

University of Groningen - Faculty of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 (0)50 3637317 (Phone)

Marcel P. Timmer

University of Gronigen - Faculty of Economics ( email )

Postbus 72
9700 AB Groningen
Netherlands

Gaaitzen de Vries

University of Groningen ( email )

P.O. Box 800
Groningen, Groningen 9747 AE
Netherlands

HOME PAGE: http://www.rug.nl/staff/g.j.de.vries/index

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