Measuring Trade in Value Added with Firm-Level Data
41 Pages Posted: 14 Jan 2020 Last revised: 11 Feb 2021
There are 2 versions of this paper
Measuring Trade in Value Added With Firm-Level Data
Date Written: January 2020
Abstract
Global Value Chains have proliferated in economic policy debates. Yet a key concept-trade in value added-is likely mismeasured because of sectoral aggregation bias stemming from reliance on input-output tables. This paper uses comprehensive firm-level data on domestic and international transactions to study this bias. We find that sectoral aggregation leads to overstated trade in value added. The magnitude of the bias varies across countries-at 2-5 p.p. of gross exports for Belgium and 17 p.p. for China. We study how the interplay between within-sector heterogeneities in firms' import and export intensities and size determine the magnitude of the bias.
JEL Classification: E01, F14, L14
Suggested Citation: Suggested Citation
