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WTO Working Papers

WTO working papers usually represent research in progress. Such research may be conducted in the preparation of WTO Secretariat reports, studies or other material for WTO members. The papers are circulated for comment because the WTO considers critical review of professional research to be extremely important.

English

Clustering Value-Added Trade

Structural and Policy Dimensions

The paper builds a typology of value-added traders according to their economic and trade policy characteristics. In the process, it defines clusters of countries according to the multidimensional criteria defined by value-added, economic and trade policy indicators. A second approach focuses on the relationships existing between the variables themselves, using multicriteria and graph analysis. Natural resources endowments, on the one hand, and services orientation, on the other one, are among the most determinant variables for defining Trade in Value Added (TiVA) clusters. The level of economic development remains a crucial determinant of the TiVA profile as is the size of the economy, even if not as important as initially expected. Proactive GVC up-grading strategies, such as investments in ICT and R&D tend to foster a higher foreign content in exports, compensating the lower domestic margin by higher volumes. Inwardoriented protectionist policies are not particularly successful in exporting higher share of domestic content, except in services exports; but in this case, export volumes remain marginal.

English

Keywords: effective protection rate, input-output analysis, Trade in value-added, trade policy, exploratory data analysis, global value chains
JEL: D57: Microeconomics / General Equilibrium and Disequilibrium / General Equilibrium and Disequilibrium: Input-Output Tables and Analysis; F13: International Economics / Trade / Trade Policy; International Trade Organizations; O19: Economic Development, Innovation, Technological Change, and Growth / Economic Development / International Linkages to Development; Role of International Organizations; O24: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy; F15: International Economics / Trade / Economic Integration; F23: International Economics / International Factor Movements and International Business / Multinational Firms; International Business; F14: International Economics / Trade / Empirical Studies of Trade
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