A comparison of trade performance and Global Value Chains in some European and Asian countries

Global Value Chains are probably the most prominent feature of globalization and have dramatically changed the landscape of international trade and investment patterns in the last decades. The growth of these chains is posing new challenges to studies of international trade, countries’ competitiveness and macroeconomic developments. Some traditional measures may be of little use since they are based on the assumption that all activities in the production of a good take place in the local economy, using domestic inputs only. Hence, analyses of gross export flows can be very misleading due to doublecounting of trade in intermediate inputs. On the contrary, “supply-chain trade” involves multidimensional cross-border flows of goods, investment, services, know-how, and people. In this paper, I focus on a sample of developed European and Asian countries using standard and non standard indices of competiveness and specialization in international trade. After reviewing the usual measures about the external sector, I address the well know Trade Performance Index by UNCTAD/WTO to determine leading industries in the investigated economies. Since some results conflict, I turn to worldwide Input-Output tables to investigate how production is vertically fragmented across countries. The analysis of supply chains has often focused on the computation of indicators that break down gross trade flows along sources and destinations of value added. Using the WIOD dataset, I figure out Feenstra’s narrow and broad outsourcing indices and a generalization due to Los et al. (2015). These indicators can shed some light on productive integration in European and Asian countries, and how it affects trade performance.