#statstradeevent. the changing shape of trade and investment in the uk jil matheson national...
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#StatsTradeEvent
The Changing Shape of Trade and
Investment in the UK
Jil Matheson
National Statistician
24th September 2013
#StatsTradeEvent
£100m
£100
£100m
£100m
£100m
£407bn goods
£119bn services
9.5%
11.0%
7.5%
UK – a key global trading nation
3.5% 6th place
#StatsTradeEvent
Source: ONS Balance of Payments; UNCTAD
Share of W rld Trade in 2012
Total value of UK trade in 2012 £1 trillion
4#StatsTradeEvent
0%
10%
20%
30%
40%
50%
60%
70%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
Source: ONS Value of GDP and Trade data; Value of Goods and Services imports and export
Total trade to value of GDP ratio, UK
Source: Annual Business Survey
Proportion of exporting and importing registered businesses, GB, 2011
#StatsTradeEvent
Data Collection
#StatsTradeEvent
Trade and investment statistics users…
Source : Google images
#StatsTradeEvent
#StatsTradeEvent
Inward FDI in the UK – (some of) what we know and what we would like to
know
ByRichard Harris
© Richard Harris
Evidence paper by Driffield et. al. (2013) to the Foresight Project on the Future of manufacturing in the UK
Motivation• TFP is widely recognised as the key driver of long-
run economic growth • being foreign owned is associated with higher levels
of TFP– Effects cover:
• Direct effects: FO plants are themselves more productive
• Indirect effects: there are (potential) spillovers to domestic plants from FO plants
• Overall the UK economy benefits from inward FDI even though there are issues of control and the destination of profits
11
OverviewWhat do we know
– Run through some statistics available mostly based on micro-level UK datasets covering FO shares of:
• GVA• Gross output• R&D
– Look at some examples of the analysis that can be done covering:
• Links between FO and R&D/absorptive capacity• Contribution of FO plants to overall UK productivity growth
What would we like to know– Show how spillover estimates are obtained
• Note the incompleteness of our knowledge• Outline the needs for more information (new statistics)
Source: ARD
Source: ARD
Real GVA in top 32 SIC92 industries by foreign-ownership, 2009 (£m 2000 prices)
Software consultancy and supply
Other retail of new goods in specialised stores
Telecommunications
Legal, accounting, consultancy
Miscellaneous business activities
Post & courier services
Manufacture of motor vehicles
Wholesale of household goods
Architectural & engineering & technical consultancy
Wholesale of intermediate productsManufacture of refined petroleum products
Retail in non-specialised stores
Real estateOther wholesaleAdvertisingLabour recruitment & personnel
Source: ARD
Source: BERD matched into ARD
Source: Harris (2013) – based on CIS data
Source: Harris and Moffat (2013) – using ARD
Evidence on spillover benefits• Does the ‘presence’ of IFDI increase the
productivity of non-FDI plants?– First need to establish that generally IFDI plants
have higher productivity– Then need to establish the ‘channels’ through
which ‘spillovers’ can occur– Lastly need evidence on such spillovers
• Current based on ‘association’– If high ‘presence’ of IFDI in same industry (upstream or
downstream) and/or same locality is correlated with higher TFP in domestic plants – taken as evidence of spillovers
• Need direct evidence – to establish and better understand nature of spillovers
Distribution of plant-level labour productivity in 2005
Source: FAME
What we don’t know on spillovers
• Need evidence on linkages between FO and domestic plants in terms of:– actual sales/purchases
• This also requires understanding of ‘global’ value chain activities of IFDI firms (e.g. why are they located in UK?)
– actual ‘knowledge’ linkages• Information shared with other firms and sectors• Cooperation undertaken• Hiring of labour
Conclusions• IFDI is very important to UK economy
– Concentrated here on productivity side but also jobs (covered next)
– It’s a large component of marketed output– Its more productive
• Directly and and almost certainly indirectly (through spillovers)
• But indirect effects are imprecisely measured and direct of causation is consequently unclear
– Hence need more statistical information on linkages in order to understand and measure better spillover effects
Acknowledgement
This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of these data does not imply the endorsement of the data owner or the Secure Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates
#StatsTradeEvent
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The Changing Shape of Trade and Investment in the UK
UKTI priorities and evidence needs
Crispin Simon, Director Trade: UKTI 22nd September 2013
With Thanks to Economists at HM Government FCO and UKTI
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There is no such thing as bad weather, only unsuitable clothing
Ranulph Fiennes
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Capacity Building Passport to Export Advice for the new exporter
Export Vouchers For Passport graduates
Export Reviews Comms advice & mkt research resource
3G and MSB Programmes For more experienced exporters
Open 2 Export Web community for exporters
Getting Out There Webinars Low cost personal input
Market Visit Support Grant-supported country visits
Trade Show Access Programme Grant-supported trade show presence
Missions to Markets Sector-focused country missions
In Market OMIS Research Introductory service
OMIS Facility Embassy facility use
Business Opportunity Scheme E-mail alerts from FCO Posts
High Value Opportunities Additional resource, supply chain focus
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Trade target is £1 trillion UK exports by 2020
Leverage points at firm level:
• More companies
• More companies being formed
• More companies surviving
• More companies exporting (100k by 2020)
• Exporting companies exporting more
• Gaining share in current markets
• Entering new markets
• Raising UK content of overseas sales
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Trade target is £1 trillion UK exports by 2020
Leverage points at macro level:
• More UK Geographic Market Share
• More UK market share in mature geographic markets
• More UK market share in high growth geographic markets
• More growth where UK has high market share
• More UK Sector Market Share
• More UK market share in mature sectors
• More UK market share in high growth sectors
• More growth where UK has high sector share
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UK share of key export markets in 2010
52
History continues to play a role in the pattern of UK trade. The UK tends to capture a larger market share in its former colonies than other markets.
Source: IMF, ONS and FCO Economics Unit Calculations
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%M
exic
o
Viet
nam
Indo
nesi
a
Phili
ppin
es
Kore
a
Chin
a
Thai
land
Arg
entin
a
Colo
mbi
a
Mal
aysi
a
Japa
n
Chile
Hon
g Ko
ng
Braz
il
Cana
da
Russ
ia
Mor
occo
Iraq
Indi
a
Sing
apor
e
Om
an
Turk
ey
New
Zea
land
Kaza
khst
an
Egyp
t
Saud
i Ara
bia
UA
E
USA
Kuw
ait
EU
Aus
tral
ia
Bahr
ain
Nig
eria
Sout
h A
fric
a
Qat
ar
UK Share of total import market (includes goods and services)
Former British Colonies
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UK versus EU-3 – goods export performance
53
On average the UK captures about 2.5% of foreign goods markets, versus 3% for the EU-3. The UK outperforms the EU-3 in the Gulf, but for many other emerging markets the EU-3 are
ahead. In some cases, notably Russia, Brazil, Turkey and China, the EU-3 are significantly further ahead.
Source: UNCTAD Statistics, ONS and FCO Economics Unit Calculations
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%M
exic
o
Indo
nesi
a
Viet
nam
Phili
ppin
es
Kore
a
Iraq
Chin
a
Colo
mbi
a
Kaza
khst
an
Arg
entin
a
Japa
n
Thai
land
Mal
aysi
a
Hon
g Ko
ng
Cana
da
Sing
apor
e
Chile
Braz
il
Indi
a
New
Zea
land
Russ
ia
Aus
tral
ia
Mor
occo
Turk
ey
USA
Bahr
ain
Om
an
UA
E
Saud
i Ara
bia
Egyp
t
Nig
eria
Kuw
ait
EU
Sout
h A
fric
a
Qat
ar
UK EU-3 Benchmark
Share of goods import market
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UK versus EU-3 – services export performance
55
On average the UK captures around 6% of foreign services markets, versus about 3% for the EU-3. The UK significantly outperforms the EU-3 benchmark in almost all markets. Notable exceptions are Morocco, Chile, Argentina, Mexico and Brazil.
Source: UNCTAD Statistics, ONS and FCO Economics Unit Calculations
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%Th
aila
nd
Kore
a
Phili
ppin
es
Chin
a
Indo
nesi
a
Braz
il
Indi
a
Arg
entin
a
Chile
Mor
occo
Mex
ico
Viet
nam
Mal
aysi
a
Russ
ia
Om
an
Japa
n
Colo
mbi
a
Kuw
ait
Hon
g Ko
ng
Egyp
t
Sing
apor
e
Cana
da
Saud
i Ara
bia
Iraq
UA
E
New
Zea
land
Kaza
khst
an EU
Qat
ar
Turk
ey
Nig
eria
USA
Sout
h A
fric
a
Aus
tral
ia
Bahr
ain
UK EU-3 Benchmark
Share of services import market
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• In pound terms, it is the largest economies that account for the biggest rise in import demand.
• The increase in Chinese import demand is especially large, dwarfing all other emerging markets. This reflects both China’s size and its growth potential.
• Increasing market share in these large markets will result in bigger gains for the UK, but may be more difficult to achieve because of greater competition.
Source: IMF World Economic Outlook October 2012 and FCO Economics Unit CalculationsData refer to the expected increase in goods & services imports into a given market, expressed in nominal terms.
0
500
1,000
1,500
2,000
2,500EU USA
Japa
n
Cana
da
Aus
tral
ia
New
Zea
land
Bahr
ain
Qat
ar
Mor
occo
Om
an
Egyp
t
Colo
mbi
a
Kuw
ait
Phili
ppin
es
Chile
Nig
eria
Kaza
khst
an
Sout
h A
fric
a
Arg
entin
a
Iraq
Sing
apor
e
Saud
i Ara
bia
UA
E
Turk
ey
Viet
nam
Indo
nesi
a
Mal
aysi
a
Braz
il
Thai
land
Mex
ico
Russ
ia
Hon
g Ko
ng
Indi
a
Kore
a
Chin
a
Change in import demand between 2010 and 2020 (£ Billion)
'Established'Markets
Emerging Powers
Note: EU figure includes intra-EU trade
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Meeting the £1Trillion Export Target
57
Given the weak global economic outlook, hitting the £1 trillion target will be difficult. Maintaining market share will not be enough. We need to gain market share.
Comparing the UK’s performance against our European competitors allows us to see where we might make up ground and offers a way to benchmark our performance.
Catching the EU-3 in the fastest growing emerging economies would represent a significant contribution to hitting the £1tn target.
£1 Trillion Target
2010 UK Exports
Gains from maintaining market share in all markets
Gains from catching the EU-3 in the emerging powers
Gains from catching the EU-3 in emerging Europe
500
800
300
400
100
200
0
600
700
900
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Emerging Conclusions
• £1 Trillion Exports target looks less demanding than 100k New Exporters
• Market share gains will be required
• Greatest evidence need is more insight of the market conditions (size/share/customer needs) within the geographic/sector segments (eg China/automotive; Saudi-Arabia/professional services) where we must win
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The Changing Face of Scottish Trade
The Changing Face of Scottish Trade
Jonathan SlowScottish Development International
Jonathan SlowScottish Development International
The Scottish Government
SummarySummary• Scottish Exports have grown
• But growth has not been steady • Major sectoral change has take place
• Geographic composition has remained broadly similar
• The Global Connections Survey has assisted policy focus
• Scottish Exports have grown
• But growth has not been steady • Major sectoral change has take place
• Geographic composition has remained broadly similar
• The Global Connections Survey has assisted policy focus
The Scottish Government
Source: The Scottish Government
The Global Connections SurveyThe Global Connections Survey
• Annual voluntary business export survey
• Covers all sectors in Scotland
• Covered by National Statistics guidelines
• Provides estimates of sales to Rest of World and Rest of UK
• Provides destination information
• Annual voluntary business export survey
• Covers all sectors in Scotland
• Covered by National Statistics guidelines
• Provides estimates of sales to Rest of World and Rest of UK
• Provides destination information
The Scottish Government
Source: The Scottish Government
International Growth 2002-2011International Growth 2002-2011
The Scottish Government
Source: GCS 2011
Sectoral Changes 2002-2011Sectoral Changes 2002-2011
The Scottish Government
Source: GCS 2011
Top 5 Sectors 2002-2011Top 5 Sectors 2002-2011
The Scottish Government
Source: GCS 2011
20022002 20112011
Ranking Sector Est. Sales (£m)1 Computers/Electronic/Optical 5,5702 Food & Drink 2,345
of which whisky & other distilling 1,8603 Chemicals/Coke Manufacture 2,0204 Machinery & Other Equipment 1,0205 Wholesale/Retail Trade 930
Ranking Sector Est. Sales (£m)1 Food & Drink 4,205
of which whisky & other distilling 3,5302 Chemicals/Coke Manufacture 3,6703 Computers/Electronic/Optical 1,4304 Financial Services 1,4155 Legal/Business Services 1,390
Market Changes 2002-2011Market Changes 2002-2011
The Scottish Government
Source: GCS 2011
20022002 20112011
Ranking Destination Est. Sales (£m)1 USA 2,1452 Netherlands 1,8653 France 1,7854 Germany 1,7855 Italy 9356 Eire 8457 Spain 8208 Belgium 6709 Sweden 615
10 Norway 560
Ranking Destination Est. Sales (£m)1 USA 3,5252 Netherlands 2,6653 France 1,9354 Germany 1,3655 Belgium 9806 Eire 7807 Norway 7658 Spain 7109 Switzerland 64010 Italy 610
Evidence Informing PolicyEvidence Informing Policy
• Used in developing sector strategies
• Understanding barriers to doing more international activity
• Assessment of company requirements
• Used in developing market strategies
•Driving an approach to increased international engagement
• Used in developing sector strategies
• Understanding barriers to doing more international activity
• Assessment of company requirements
• Used in developing market strategies
•Driving an approach to increased international engagement
The Scottish Government
Source: GCS 2011
Measuring Trade in Value Added, and Beyond
The Changing Shape of Trade and Investment in the UK
London, September 2013
Background – Global Production today
• A world of increasing international fragmentation of production– Explosion of trade in intermediates as firms
specialise in stages (tasks) of production
• Gross trade flows increasingly embody components (and so value) created elsewhere
70
71
A simple example – the iPod
Distribution of the value added
• 299 US$– 75$ profit to US (Apple)– 73$ whls/retail US (Apple)
The Apple iPod = 299$ of Chinese ‘exports’ to US
http://blogs.computerworld.com/node/5724
– 75$ to Japan (Toshiba)– 60$ 400 parts from Asia– 15$ 16 parts from the US– 2$ assembly by China
A slightly more complicated example – the Dreamliner
72
Escape slides: Air Cruisers (USA)
Horizontal Stabiliser:Alenia Aeronautica (Italy)
Centre fuselage: Alenia Aeronautica (Italy)
Final assembly: BoeingCommercial Airplanes (USA)
Vertical Stabiliser: BoeingCommercial Airplanes (USA)
Landing gear: Messier-Dowti (France)Electric brakes: Messier-Bugatti (France)Tires: Bridgestone Tires (Japan)
Doors & windows:Zodiac Aerospace (USA)PPG Aerospace (USA)
Tools/Software: Dassault Systemes (France)Navigation: Honeywell (USA)Pilot control system: Rockwell Colins (USA)Wiring: Safran (France)
Centre wing box:Fuji Heavy Industries (Japan)
Engines: GE Engines (USA),Rolls Royce (UK)
Wing box: Mitsubishi Heavy Industries (Japan)Wing ice protection: GKN Aerospace (UK)
Engine nacelles: Goodrich (USA)Aux. power unit: HamiltonSundstrand (USA)
Flight deck seats:Ipeco (UK)
Lavatories:Jamco (Japan)
Cargo doors: Saab (Sweden)
Forward fuselage:Kawasaki Heavy Industries (Japan)Spirit Aerosystems (USA)
Raked wing tips: Korean AirlinesAerospace division (Korea)
Passenger doors:Latécoère Aéroservices (France)
Prepreg composites:Toray (Japan)
Rear fuselage:Boeing South Carolina (USA)
So?
Gross trade statistics increasingly ‘multiple count’ flows in intermediates as the production process develops over several countries…
73
AB
C
Gross exports (110)
Value-added (10)
Value-added (100)
Country
Country Country
Gross exports (intermediates) (100)
………
…meaning that gross trade statistics may create ‘misleading perceptions’ and imperfect policies
74
For example….
• Where are our export markets? • Which sectors create most value and jobs? • Does protectionism work? Is it counter-
productive– Are there costs on importers of intermediates,
particularly when they are significant exporters.
– What about those firms further upstream providing inputs to the imports?
• How should we interpret bilateral trade balances?
75
How can we respond?
• By measuring the value that is added by individual firms in the production process
76
AB
C
Gross exports (110)
Value-added (10)
Value-added (100)
Country
Country Country
Gross exports (intermediates) (100)
How do we measure TiVA?
• Using a global IO table
77
What are we doing?
• Using database on national IO tables to create a global IO table.
• OECD: IO tables for 58 economies and 37 industries for 1995/2000/2005/2008,2009, (more than 95% of world GDP)
• Bilateral trade data for the flows;
• Collaborating closely with: – other institutions/initiatives: USITC, IDE-JETRO, WIOD;
MOFCOM and forging closer links with others including Eurostat.
Launched OECD-WTO TiVA database in January 2013
78
A database on OECD.Stat
• With a number of indicators………….– Decompositions of gross exports by industries into their
domestic and foreign content, with the domestic content split into three (direct, indirect and re-imported) components and the foreign content broken down by source country;
– The services content of gross exports by exporting industry (broken down by foreign/domestic origin);
– Bilateral trade balances based on flows of value-added embodied in domestic final demand;
– Intermediate imports embodied in exports, as a per cent of total intermediate imports.
79
What does the first release tell us? Domestic content of exports
80
0%
20%
40%
60%
80%
100%
LUX
SVK IRL KOR
HUN CZE ISL NL
D BEL
SVN FIN SWE EST
CHN PRT
DNK
AUT ISR MEX
CHE
POL
DEU FRA
GRC IND
TUR ESP ITA CA
NCH
LNZ
LGB
R ZAF
NOR JPN IDN
AUS
USA
BRA
RUS
2009 1995
Exports require imports foreign content of exports - UK
81
0%5%
10%15%20%25%30%35%
Agricul
ture Mining
Food pr
oducts Textiles
& app
arel
Wood &
paper
Chemic
als &
minera
lsBas
ic metal
s
Machine
ryEle
ctrical
equipm
entTra
nsport
equipm
entOth
er man
ufacture
sWh
olesale
& reta
ilTra
nsport &
tele
coms
Financ
e & insu
rance
Busines
s serv
icesOth
er servi
ces
Total
2009 1995
Imports and competitiveness
Per cent of total sector growth in value-added driven by exports 1995-2009
82
Import content growing
Import content decreasing
Exports and Imports (i)
83
Exports and Imports (ii)
84
With hubs playing an important role
85
And a significant share of total intermediate imports is used in exports - UK
86
0%
20%
40%
60%
Agricu
lture
Mining
Food
produc
ts
Textil
es & a
pparel
Wood
& pape
rCh
emica
ls &
minera
lsBa
sic me
tals
Machi
nery
Electri
cal
equipm
entTra
nsport
equipm
entOth
er ma
nufact
ures Utilitie
s
Whole
sale &
retail
Transp
ort &
telecom
sFin
ance &
ins
urance
Busin
ess se
rvices
Other s
ervice
s Total
2009 1995
Particularly in sectors with high fragmentation
87
VA figures reveal significant and increasing export dependencies
88
Around and over 2/3rds in many sectors And over half for
all manufacturing
Services matterServices Value-Added: % of exports, 2009
89
And have a high content in goods - UK
90
0%
10%
20%
30%
40%
Agricu
lture
Mining
Food
produ
cts
Textil
es & a
ppare
l
Wood
& pap
er
Chem
icals &
min
erals
Basic
metals
Machi
nery
Electri
cal
equip
ment
Transp
ort
equip
ment
Other
manu
factur
es
Foreign service contents Domestic service contents 1995 Total
Design, R&D, software etc becoming more important - Services content of transport equipment
91
0
10
20
30
40
50
2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995
FRA DEU ITA JPN KOR MEX SVK ESP SWE GBR USA BRA CHN IDN
Foreign Domestic
Trade patterns change - UK
92
0.0
5.0
10.0
15.0
20.0
25.0
USA DEU FRA ITA ESP IRL NLD JPN CHN CAN BEL SAU CHE AUS IND
Gross exports (EXGRSH) Domestic value added in foreign final demand (FDDVASH)
0.0
5.0
10.0
15.0
20.0
USA DEU FRA CHN ESP ITA NLD NOR JPN IRL BEL RUS CAN POL CHE
Gross imports (IMGRSH) Foreign value added in domestic final demand (FDFVASH)
-30,000
-20,000
-10,000
0
10,000
20,000
USA SAU IRL AUS SGP CHE FRA NLD ESP DEU NOR CHN
2009 Gross Trade surplus/deficit (TSGR) 2009 Value Added surplus/deficit (TSVAFD)
Significantly for some countries - China
93
0.0
5.0
10.0
15.0
20.0
25.0
30.0
USA JPN DEU GBR FRA CAN KOR RUS ITA AUS IND ESP MEX NLD HKG
Gross exports (EXGRSH) Domestic value added in foreign final demand (FDDVASH)
0.0
5.0
10.0
15.0
USA JPN DEU KOR AUS SAU TWN RUS BRA FRA IND ITA GBR CAN MYS
Gross imports (IMGRSH) Foreign value added in domestic final demand (FDFVASH)
-100,000
-50,000
0
50,000
100,000
150,000
200,000
250,000
USA GBR MEX FRA NLD VNM THA JPN BRA MYS TWN KOR
2009 Gross Trade surplus/deficit (TSGR) 2009 Value Added surplus/deficit (TSVAFD)
And throughout Factory Asia
94
0
5
10
15
20
25
30
35
40
2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995 2009 1995
Chinese Taipei
Japan Korea Malaysia Thailand Hong Kong, China
Singapore Philippines India Indonesia Viet Nam Cambodia Brunei Darussalam
Value-Added Gross
Exports to China: Gross and Value-added terms, % of total
Who trades with who? Japan’s trade balances
95
In general – the more distant the countries the more likely that gross trade statistics underestimate the relationship
Change in trade shares based on Value-Added in
96
-6
-4
-2
0
2
4
6
8
10
TWN
KOR
PHL
JPN MYS AU
STH
ASA
URU
SEU
27 IDN
TUR
ARG
BRA IND
CHN ZAF
VNM ISR
KHM CAN
MEX
Exports Imports
-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
PHL
TWN THA
MYS JPN KOR ISR AUS
USA
RUS
EU27 ZA
FIND IDN CA
NVN
M MEX
TUR
CHN
KHM CH
LAR
G
Exports Imports
BrazilUnited States
97
98
Whilst there are limitations to the widespread calculation of trade in value-added data, the OECD-WTO initiative is to be applauded for providing a more revealing look into global trade and integration and for paving the way for further development in this area.
But it is important to stress
• That this is a work in progress and that results are
estimates• But they are robust enough to already begin to highlight
– the need for policies to account for GVCs
• But perhaps more importantly, they highlight
– the importance of capacity building and better statistics
• Improving data quality is essential
– Coherent estimates of trade in goods and services
– A new approach to Supply-Use Tables?
• With a focus on stages and trade rather than industries, per se, to better reflect firm heterogeneity (particularly MNEs).
• Import/export intensities, factoryless firms, processors, ownership99
What can be done now?
• Improved GROSS trade data•Import flow matrices•Better bilateral trade statistics
(integrated with SU tables) and globally consistent
• Intelligent confidentiality rules (suppress 6 digit not 2 digit HS)
•Re-export data•Second hand goods, scrap and waste.•SERVICES –EBOPS 2012.
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Examples of current inconsistencies in bilateral trade statistics (Services 2009)
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What else can be done…..now?• Capitalise on existing data to create new
indicators on exporting and importing firms• Beyond TEC: Linking trade registers, business
registers and SBS• OECD Workshop on linking business and trade statistics: 25-26 October
2012
• Exploring feasibility of creating new indicators based on export (and
import) intensities, ownership and size.
• And also provides stepping stone for trade in icnome related to investment
• Changes to classification systems to better reflect globalisation:– Factoryless producers (UNECE Task Force on Global
Production)102
Extensions
• Trade in jobs and skills
– But requires
• Coherent employment and value-added data
– Also important for productivity estimates
• And significant improvement in skills data (and occupations)
Jobs embodied in foreign final demand - % of total
103
Extensions
• Trade in Income related to Investment: Ownership matters: – Because value added does not always stick (compensation for use of knowledge based
assets – where increasingly registration is determined by tax environment)
– And because flows for use of IPPs are often recorded as property income and not trade in services.
– 30% of total business sector VA in 2009 in the UK generated by foreign owned firms, 15% of GDP. Accounting for the underlying flows could further change trade relationships, even though differences between GNI and GDP are small.
– In Japan for example Primary income flows (GNI minus GDP) were equivalent to about one-quarter of total TiVA flows.
• Need better FATS data, particularly on value-added and employment.
– MSITS 2010 Compilers Guide
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Summary – What’s needed
• New thinking on SU tables
• Better gross trade data
• Links to microdata
• Income, Ownership and FATS
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Further information
• www.oecd.org/trade/valueadded
• Video: http://www.youtube.com/watch?feature=player_embedded&v=RZKX-0SK41U
• OECD Workshop on Measuring TiVA 5-6 December 2013
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The Changing Nature of the UK’s Involvement in Global Value Chains
prepared for the Business Statistics User Event:
The Changing Nature of Trade and Investment in the UK
24th September 2013
Dr. Michael GasiorekCARIS, University of Sussex
& InterAnalysis
[email protected] www.tradesift.com
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What are the issues....• The last 10-15 years have seen the increasing
integration of firms in value chains or supply chains.• Firms increasingly purchase and sell goods and
services as intermediate inputs internationally. • This process has become known as the
fragmentation of the supply chain. • Conventional wisdom suggests this has enabled a
finer degree of “within industry” specialisation, leading to increased productivity & competitiveness.
• Also resulted in greater inter-dependance between countries
CARIS
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What are the issues....• Looking at gross exports may be misleading. Need to
be able to identify the value added in those exports. • To do so, need to identify the intermediates that are
used by each industry and where the intermediates come from: domestic v imported input-output tables.
• Two recent data-sets (TiVA & WIOD) have been released which provide this information and allow these issues to be explored:
• Important for policy and for understanding the changes that have taken place in the UK economy
CARIS
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TiVA and WIOD - overview• TiVA (trade in value added)
– Produced by the OECD– Indicators for 18 sectors – manufacturing and services– 57 economies (OECD + others) – 1995, 2000, 2005, 2008, 2009
• WIOD (world Input Output Database)– Produced by – Provides detailed (input-output) tables for 36 sectors – covers 27 EU countries + 13 other countries – period 1995-2009. – Includes information on the employment by skill type (high
medium & low) embodied in trade and production CARIS
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Every picture tells a story….
CARIS
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Domestic value added in gross exports• Chart shows that for the UK, the share of domestic
VA in exports has gone up (from 79% to 83%)• Interestingly for the others we see the reverse trend
– China: 88% 67%– India: 90% 78%– Germany: 81% 73%
• This would appear to suggest that the UK may be engaging less in international value chains, while competitors are engaging more.
• Important to understand this and to consider the extent to which this “matters”.
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Possible explanations1. Within industries the UK is producing more of the
value chain (MVC) - supplying more intermediates2. Within industries UK is now producing a higher
value part of the value chain eg. moving up the value chain (UVC)
3. No compositional changes but within industries the price of UK intermediates relative to the price of the final goods it exports has gone up
4. Changes in the structure of the UK economy – Decline of sectors with a low domestic value chain share – growth of sectors with a high domestic value chain share
CARIS
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Possible explanations• (1) and (2) suggest that the UK is becoming more
competitive in the intermediates it supplies for use in the final goods that the UK then exports
• (3) suggests that the UK is becoming less competitive in the intermediates it supplies
• Assessing competitiveness in the intermediates is tricky – and cannot be done with TiVA data directly
• TiVA gives revealed comparative advantage for 9 manufacturing sectors
• This does not identify the intermediates used in those sectors, however if the UK was more competitive in the intermediates might also expect this to be the case for the final goods too.
CARIS
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Ag, for fish
Food, Bev, & Tob
Wood, Paper, prntng
Chem Basic metals
Machry.
Elect & Opt.
TranspEquip
Manuf nes
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Possible explanations
• Each of (1), (2) and (3) Producing more of the value chain (MVC) Producing higher up the value chain (UVC) Increasing price of UK intermediates
...imply changes taking place within industries, so we would expect to see a higher share of domestic value added within industries
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Wood, Paper, prntng
Chem TranspEquip
Ag, for fish
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For Chemicals and Transport Equip: RCA , domestic VAsh For these competitiveness may be related to more international fragmentation as opposed to less
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Ag,For. & Fishg, and Wood, Paper & Printing: RCA, dom Vash Therefore may be consistent with explanations 1,2 or 3
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Overall
• There are 10 industries where the UK value added share has gone up,
– five are service industries accounting for 21% of the UK’s exports.
– five of these in manufacturing comprising 28% of the UK’s exports in 2009;
– No clear pattern between competitiveness and domestic value added share – but this is at a very aggregate level
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What do the graphs suggest?1. There are four sectors where the UK’s revealed
comparative advantage has gone up: – food, beverages and tobacco; – wood, paper, printing and publishing;– Chemicals and non-metallic mineral products– Transport equipment
2. In only two of the sectors which saw a rise in the UK’s domestic share of value added, is there evidence of the RCA rising.
3. Note also little difference at this aggregate level between the RCA using gross exports and value added exports. This is unsurprising.
CARIS
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What about inter-sectoral compositional shifts?
CARIS(Note: Excluding industries with a 2009 share less than 2.5%)
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What about inter-sectoral compositional shifts?
CARIS(Note: Excluding industries with a 2009 share less than 2.5%)
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What about inter-sectoral compositional shifts?
CARIS(Note: Excluding industries with a 2009 share less than 2.5%)
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Some significant changes here
• Indicative of substantial compositional shifts• Decline in the share of all manufacturing sectors.• growth in the importance of “financial
intermediation” (65-67) from 4.9% of value added exports to 18%
• Growth in “real estate, renting and business activities” (70-74) from 8.7% to 16.7%.
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So what is the story?• Post 1995 restructuring of the economy towards financial &
business services. These sectors have a higher value added share in exports, so this is driving the aggregate results
• Decline in manufacturing in the UK, though not necessarily by UK firms. Production and exports shifted to 3rd countries.
• In contrast (possibly) Germany shifted source of intermediates to third countries. China and India changes driven more by the opening up of their economies
• May have been exacerbated by overvalued exchange rate. On the one hand this makes imported intermediates cheaper (encouraging their use; on the other hand makes exports more expensive. Net effect unclear
• However, hard to see in detail what is happening to trade
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For that you need more detailed trade data...• Out of 4696 goods exported in 2011, the top 50 UK HS 6-
digit exports account for just under 50%.• Those 50 industries accounted for 36% of UK exports in 2001• Of those 50 industries, nearly 25% saw their revealed
comparative advantage over 2001-2011 decline. • These industries accounted for 18% of UK exports in 2001,
and 14.6% in 2011.• Out of the 50 industries the 10 which saw their RCA rise the
most, saw their share of exports over the period rise from just under 2% to 6.6%.
CARIS
Another picture, another story?
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