The Role of Global Value Chains in the Export of Manufactured Goods
One of the most noticeable trends in international trade in recent decades is the increasing importance of global value chains (GVCs), which involve the fragmentation and dispersion of production processes across different countries. To understand the role of GVCs in the export of manufactured goods, we use a method of decomposition based on inter-country input-output tables, which capture the flows of intermediate and final goods among sectors and countries. This method allows us to measure the foreign value added embodied in a country’s exports, which reflects the extent of GVC participation. We analyse the network structure of the foreign value added in manufactured goods exports for the period 1995-2020, and observe how it evolved over time. We also apply a community detection algorithm to identify groups of countries that form cohesive groups in the network. We find that these communities are largely determined by geographical proximity, suggesting that regional integration plays a significant role in GVCs. Furthermore, we identify the main source industries of foreign value added from the most influential suppliers in the GVC network. The analysis also reveals the changing roles played by countries in the GVC network over time, while highlighting the dramatic rise of China as a dominant supplier of value added in manufactured goods exports of other countries.
(Joint work with Dr. Deepika Srivastava)