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Global Value Chains and Trade in Value-Added: New Insights, Better Policies

Ken Ash - March 2013

This paper stresses the importance of the growth in global value chains (GVCs) across countries using data from the new Trade in Value-Added (TiVA) database launched by the OECD and WTO in January 2013. The TiVA initiative shows the value added by a country in the production of any good or service that is then exported, and offers a fuller picture of commercial relations between nations. It is argued that trade policies and in particular those involved in the formation of regional trade agreements must be able to reflect the importance of GVCs.

Speed Read
  • The high shares of intermediate inputs in world trade in goods and services is due to the growth of global value chains
  • Global value chains reduce costs and raise productivity enhancing competitiveness.
  • The OECD and WTO’s new value added database reveals that trade in services play a far larger role in manufacturing trade than indicated by conventional trade statistics.
  • Multilateral and regional trade and investment agreements will need to reflect the existence of global value chains to include action to increase competition and investment.



As world markets have become increasingly integrated, businesses are spreading their chains of production across the globe. Instead of producing goods in locations near major suppliers or consumers, multinational firms are 
benefiting from the sharp falls in transport and communication costs over the past two decades to establish global value chains (GVCs) across several countries.

 

One indication of such production fragmentation is the rising share of intermediate inputs in world trade. These inputs to t...

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