Extending the Input-Output Table Based on Firm-Level Data

46 Pages Posted: 15 Apr 2016

See all articles by Heiwai Tang

Heiwai Tang

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS); The University of Hong Kong - Faculty of Business and Economics; CESIfo; Kiel Institute for the World Economy

Fei Wang

Honghe University; Assumption University

Zhi Wang

U.S. International Trade Commission

Date Written: March 17, 2016

Abstract

This paper proposes a general method to extend a standard input-output (IO) table to incorporate firm heterogeneity when portraying the domestic segment of global value chains in a country. We develop a quadratic optimization model to estimate an extended IO table that reports inter-sector transactions between different types of firms in an economy, using information from standard IO tables along with various linear constraints implied by sector-level statistics and firm-level data. The proposed method permits the computation of standard errors of all values in the estimated IO tables, inferred from bootstrapped samples of the underlying firm-level data. As an illustration, we implement our model using Chinese IO tables and firm census data. We then use the estimated IO tables to compute the direct and indirect domestic value added in exports of different firm types in China. Based on our reconciled data sets for 2007 and 2010, we find that both state-owned enterprises (SOE) and small and medium enterprises (SME) in China have much higher value-added exports (VAX) to gross exports ratios, compared to the rest of the economy. While the VAX ratio of China’s aggregate exports increased by about 9% between 2007 and 2010, SOE’s and SME’s VAX increased by 47% and 27%, respectively.

Keywords: value-added trade, global value chains, quadratic optimization, intra-national trade

JEL Classification: F100, C670, C820

Suggested Citation

Tang, Heiwai and Wang, Fei and Wang, Zhi, Extending the Input-Output Table Based on Firm-Level Data (March 17, 2016). CESifo Working Paper Series No. 5811, Available at SSRN: https://ssrn.com/abstract=2764787

Heiwai Tang (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

CESIfo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Fei Wang

Honghe University ( email )

Politics&international relations school
Mengzi, Yunnan 661100
China

Assumption University ( email )

592/3 Ramkhamhaeng 24
Hua Mak
Bangkapi, Bangkok 10240
Thailand

Zhi Wang

U.S. International Trade Commission ( email )

500 E Street, SW
Washington, DC 20436
United States

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