Estimating Trade in Value Added in the World Economy

Abstract

The aim of the article is to analyze the estimates of value added trade in the global economy. The genesis of approaches to estimating international trade in value added and the development of the methodology for its statistical accounting are considered. The article highlights the joint initiative of OECD and the World Trade Organization to create a database of indicators of trade in value added (TiVA) as well as key gross trade indicators, enlarged groups of indicators of countries’ participation in global value chains, contained in TiVA, and the methods of their calculation. There analyzed some major indicators contained in TiVA, which characterize the features of value added in the context of countries of the world, including: gross added value by country and its growth rate; breakdown of sectors of the economy of countries by the share in the created value added; share of services in the total added value created in the leading countries in terms of its growth rate; changes in the domestic value added share of gross exports by country. Particular attention is paid to the issue of determining sectoral characteristics of trade in value added in the countries with which Ukraine has significant volumes of trade in goods. The changes in the domestic value added share of gross exports by countries are studied. The countries from which Ukraine imported the largest volumes of goods in monetary terms are singled out, and the main groups of imported goods are identified. There analyzed the changes in the domestic value added share of gross exports of mineral fuels, oil and its distillation products as well as domestic value added in the export of countries — key partners of Ukraine in the context of foreign economic activity. It is determined that the long-term trend in the reduction of industrial production in the economy of Ukraine and the technological lag have led to the degradation of national high-tech industries and the deepening of specialization in the export of low-grade products. It is substantiated that inclusion in global value chains can potentially attract foreign investment into the country to industrialize the economy and provide employment.

Keywords

• value added
• valuation
• trade
• global value chains
• exports
• imports