Database sheds new light on global value chains

WORLD: Database sheds new light on global value chains

By Leonie Barrie | 25 April 2012

A new tool that measures the value of goods traded between European Union (EU) and other major countries and the rest of the world by looking at the separate stages of production instead of gross value, has been unveiled by the World Trade Organization (WTO).

Launched as an alternative to conventional trade statistics to give a picture of imbalances between countries, the World Input-Output Database (WIOD) is also aimed at helping countries make more accurate and more beneficial trade policy decisions.

The new database gives a better view of the global value chains created by world trade, the WTO says.

"These added-value chains have become an essential feature of our economic reality as trade is becoming increasingly globalised and today's traded products are not produced in a single location but are the end-result of a series of steps carried out in many countries around the world," it adds.

Instead of counting the gross value of goods and services exchanged, the new database reveals the value-added embodied in these goods and services as they are traded internationally.

"The findings are significant as they change the perception of the competitiveness of certain sectors in some countries," the WTO notes.

Deputy director-general Alejandro Jara added that while current trade statistics do not accurately reflect the modern globalised supply chain since they focus on gross trade flows, the reality is that the value of many of today's products includes activities performed in multiple countries.

"This reality has enormous implications for the way we think of trade impacts. From an economy-wide perspective, it is wrong to think uni-dimensionally of imports sucking jobs out of the economy and exports creating them. The picture is far more complicated than that."

Sectors: Sourcing