A Portrait of Trade in Value Added Over Four Decades

60 Pages Posted: 27 Dec 2016

See all articles by Robert C. Johnson

Robert C. Johnson

University of Notre Dame - Department of Economics

Guillermo Noguera

Columbia University

Date Written: December 2016

Abstract

We combine data on trade, production, and input use to document changes in the value added content of trade between 1970 and 2009. The ratio of value-added to gross exports fell by roughly 10 percentage points worldwide. The ratio declined 20 percentage points in manufacturing, but rose in non-manufacturing sectors. Declines also differ across countries and trade partners: they are larger for fast growing countries, for nearby trade partners, and among partners that adopt regional trade agreements. Using a multi-sector structural gravity model with input-output linkages, we show that changes in trade frictions play a dominant role in explaining all these facts.

Suggested Citation

Johnson, Robert C. and Noguera, Guillermo, A Portrait of Trade in Value Added Over Four Decades (December 2016). NBER Working Paper No. w22974. Available at SSRN: https://ssrn.com/abstract=2890078

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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