Working Paper Series no. 715: Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components

Over the period 2000-2016, the share of intermediate goods in world trade in nominal terms is fairly well correlated to various Global Value Chain (GVC) indicators based on international input-output matrices: a moderate expansion of international fragmentation followed by a decline from 2011 onwards.

However, taking into account price effects (using an original deflator by production stages based on very detailed and harmonised bilateral trade unit-values), our results show a different evolution: the intermediate trade share in volume is growing at a subdued rate between 2000 and 2016.

Focusing on the manufacture of Parts and Components (P&C), which corresponds to activities more embedded in GVCs than other intermediate goods, that is, semi-finished products, the same pattern emerges, namely a slight increase in the share of P&C in manufacturing world trade in volume. Furthermore, after controlling for the global business cycle, there is a modest but steady rise, with no sign of a downturn after the Great Recession.

GVCs are particularly well-developed for electronics, the share of this sector in P&C trade being the highest and remaining stable over the period. However, subsectors exhibit contrasting developments: P&C trade related to office machinery and computers receded while trade in telecommunications equipment, the flagship IT revolution industry, thrived.

Counts of clients or suppliers by stages of production indicate a higher and growing geographical diversity for P&C..