Trade%20in%20Intermediate%20Goods%20and%20Services

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Trade in Intermediate Goods and Services
Rainer Lanz, Sébastien Miroudot, Alexandros
Ragoussis Trade Policy Linkages and Services
Division OECD Trade and Agriculture Directorate
WPTGS, 18 November 2009
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Trade and activities of multinational
enterprisesProgramme of work of the OECD Trade
Committee

• Vertical Trade, Trade Costs and FDI
  (TAD/TC/WP(2008)23/FINAL)
• Trade in Intermediate Goods and Services
  (TAD/TC/WP(2009)1/FINAL)
• Next year
• Intra-firm trade and investment
• Trade in tasks
• Next Programme of Work and Budget (2011-2012)
  analysis of trade flows in value-added?

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Trade in intermediate goods and services

• Objectives of the study
• To assess trade flows of intermediate goods and
  services among OECD countries and with their main
  trade partners
• To analyse the determinants of trade in
  intermediate inputs
• To look at the relationship between productivity
  and trade in intermediates at the industry level

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Intermediate goods in trade data

• OECD International Trade by Commodity Statistics
  (ITCS) database
• UN Broad Economic Categories (BEC) classification
• Based on the Standard International Trade
  Classification (SITC Rev. 3)
• Grouping of commodities according to main end
  use
• capital goods
• intermediate goods
• consumption goods
• not classified (motor spirit, passenger motor
  cars, goods n.e.s.)

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Input-Output (I-O) Tables

• I-O tables present in matrix format the supply
  side and the demand side of an economy
• OECD I-O database 2009 edition
• 39 countries, 48 industries (aggregated to 29)
• Year coverage 1995, 2000 and 2005 (ideally)
• Identification of both the industry of origin and
  using industry
• Allows distributing bilateral trade over using
  industries k
• Estimation of bilateral imports of intermediate
  services

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Combining trade data with I-O tables

• Imports of intermediate inputs p from country j
  by industry k in country i

• mijpt bilateral imports of inputs p (? BEC
  trade data)
• aipkt - share of imported inputs p used by
  industry k (? I-O tables)
• Five dimensions importer i, exporter j, industry
  of origin p, using industry k and year t

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Share of intermediate to total trade

1. Intermediate goods and services dominate trade
   flows
2. Share in total trade has remained fairly constant
   over time

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Intra- and inter-regional imports of intermediate
goods (Billion USD, 2006)
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Share of regions in world intermediate goods
imports (2006)
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Econometric analysis
Gravity regressions

• In comparison to imports for final consumption,
  imports of intermediates are
• more sensitive to trade costs
• less attracted by bilateral market size
• The activity of multinational enterprises impacts
  positively imports of intermediate inputs

Production function regressions

• A higher use of foreign inputs increases the
  productivity of domestic industries

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Main policy conclusions of the analysis

• Trade in intermediates is more sensitive to trade
  barriers.
• Policies aiming at fully benefiting from
  international production networks should reach a
  higher degree of trade liberalisation. But tariff
  escalation should be avoided.
• Trade in intermediates has an important regional
  dimension.
• Trade in intermediates depends less on the size
  of the market and on the "home bias" of
  consumers.
• This represents a chance for emerging economies
  and small economies that can specialise in the
  production of inputs.

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Thank you for your attention!

• sebastien.miroudot_at_oecd.org

rainer.lanz_at_oecd.org