Measuring Global Value ChainsRobert C. Johnson

NBER Working Paper No. 24027
Issued in November 2017
NBER Program(s):International Finance and Macroeconomics, International Trade and Investment

Recent decades have seen the emergence of global value chains (GVCs), in which production stages for individual goods are broken apart and scattered across countries. Stimulated by these developments, there has been rapid progress in data and methods for measuring GVC linkages. The macro-approach to measuring GVCs connects national input-output tables across borders using bilateral trade data to construct global input-output tables. These tables have been applied to measure trade in value added, the length of and location of producers in GVCs, and price linkages across countries. The micro-approach uses firm-level data to document firms' input sourcing decisions, how import and export participation are linked, and how multinational firms organize their production networks. In this review, I evaluate progress on these two tracks, highlighting points of contact between them and areas that demand further work. I argue that further convergence between them can strengthen both, yielding a more complete empirical portrait of GVCs.