TRADE IN VALUE ADDED (TIVA)

AND STEEL

Norihiko Yamano and Ali Alsamawi OECD Directorate for Science, Technology and Innovation OECD Steel Committee the 82nd session 23-24 March 2017

An Alternative view of trade relationships across countries ...

… measuring international flows of value added and providing new insights into:

• Global interconnectedness

• Direct and indirect economic effects of trade

http://oe.cd/tiva

What is TiVA?

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• Foreign value added content of gross exports i.e. backward linkages in GVCs to upstream countries, and their industries

• Domestic value added content of foreign exports i.e. forward linkages in GVCs to downstream countries

• Distribution of services value added embodied in gross exports of manufactured goods

• Decomposition of gross exports (value added of exporting industry, indirect impacts from other domestic industries, foreign value added)

• Country and industry origin of value added in final demand goods and services

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Examples of TiVA indicators

• The core of TiVA project is construction of an Inter-Country Input-Output model (ICIO)

• 63 individual countries/economies + rest of the world (covering OECD, EU, G2o, S.E. Asia)

• 34 industries • of which: 16 manufacturing sectors including “Basic Metals”

• Heterogeneity within industry • Processing firms (China) , Global manufacturing (Mexico)

Coverage

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• Extended ICIO

– Split the Basic metals manufacturing activity into Iron and steel and Non-ferrous metals (“S-extended ICIO 2016”)

• Jobs and compensation of employees (labour income) embodied in foreign value added

• New indicators

– Intermediate exports by final destination

– Value added sources of imported products

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Extended analysis in 2016/2017

• Basic metals (2-digit industry level)

– Iron, crude steel and steel products

– Non-ferrous metals

• Simplified methodology rather than preferred option of full-scale update of Inter-Country Input-Output (ICIO) tables

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Splitting aggregate industries

Input-Output and Supply and use tables 7-12 countries

National Accounts and Business statistics 41-58 countries

Bilateral trade in goods statistics 55-60 countries

Other industry specific data Crude steel production (World Steel Association)

47 – 49 countries

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Data sources for splitting Basic Metals

Production networks

Steel plates and sheets

Metal

products

Consumers

Business

services

Pig iron and crude steel

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Backw

ard

Mining Coke Electricity

Forw

ard

Machinery Construction Transportation

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Domestic Value Added share of unit iron

and steel production/exports (2000-2011)

Source: OECD (2016) S-Extended ICIO

30%

40%

50%

60%

70%

80%

90%

100%2000 2011

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Intermediate exports of basic metals by destination

region bloc

CAN NAFTA EU28

S.Amr

ASEAN

RoW

ITA EU28 Asia

N.Amr

RoW

JPN Other Asia EU28

N.Amr

RoW

• Increased foreign dependency – Domestic VA sustained by foreign demand; and

exports per total VA

– Foreign contents in steel production

• Steel industry has relatively high foreign content and is more dependent on foreign economic demand than other material manufacturing goods

• Further extensions to enhance quality of ICIO-based analysis: – disaggregate the mining sector

– increase country coverage

– nowcasting (more recent years)

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Summary

THANK YOU More information at

http://oe.cd/tiva http://oe.cd/i-o

Appendix:

Industry list (S-extended ICIO2016)

Agriculture, Mining Agriculture [01,05], Mining [10,14]

Manufacturing Food products [15,16],

Textiles & apparel[17,19]

Wood [20]

Paper print publishing [21,22]

Coke, petroleum[23]

Chemicals[24]

Rubber & plastics[25]

Non-metallic minerals[26]

Iron and steel[271]

Non-ferrous[272]

Fabricated metals[28]

Machinery [29]

ICT & electronics [30,32,33]

Electrical machinery [31]

Motor vehicles [34]

Other transport equipment [35]

Other manufacturing [36,37]

Utility and

Construction

Utilities [40T41], Construction [45]

Business services Wholesale & retail [50,52]

Hotels & restaurants [55]

Transport & storage [60-63]

Post & telecoms [64]

Finance & insurance [65-67]

Real estate [70]

Renting of machinery [71]

IT services [72]

Other business services [73,74]

Other services Public admin [75];

Education [80];

Health [85];

Other services [90-93];

Private households [95]

[ISIC Rev.3 code]