RESEARCH AND ANALYSIS: WORKING PAPERS

Clustering Value-Added Trade: Structural and Policy Dimensions

The paper builds a typology of value-added traders according to their economic and trade policy characteristics. In the process, it defines clusters of countries according to the multi-dimensional criteria defined by value-added, economic and trade policy indicators.

A second approach focuses on the relationships existing between the variables themselves, using multi-criteria and graph analysis. Natural resources endowments, on the one hand, and services orientation, on the other one, are among the most determinant variables for defining Trade in Value Added (TiVA) clusters. The level of economic development remains a crucial determinant of the TiVA profile as is the size of the economy, even if not as important as initially expected. Pro-active GVC up-grading strategies, such as investments in ICT and R&D tend to foster a higher foreign content in exports, compensating the lower domestic margin by higher volumes. Inward-oriented protectionist policies are not particularly successful in exporting higher share of domestic content, except in services exports; but in this case, export volumes remain marginal.

 

No: ERSD-2014-08

Authors: Hubert Escaith and Hadrien Gaudin

Manuscript date: June 2014

Key Words:

Trade in value-added, global value chains, trade policy, input-output analysis, effective protection rate, exploratory data analysis.

JEL classification numbers:

D57, F13, F14, F15, F23, O19, O24

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Disclaimer 

This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its author(s). They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members' rights and obligations under the WTO. Any errors are attributable to the author(s).

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