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Costs and Benefits of Economic Integration in Asia$
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Robert J. Barro and Jong-Wha Lee

Print publication date: 2011

Print ISBN-13: 9780199753987

Published to Oxford Scholarship Online: September 2011

DOI: 10.1093/acprof:oso/9780199753987.001.0001

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A World Factory in Global Production Chains: Estimating Imported Value-Added in Exports by the People's Republic of China

A World Factory in Global Production Chains: Estimating Imported Value-Added in Exports by the People's Republic of China

Chapter:
(p.241) 9 A World Factory in Global Production Chains: Estimating Imported Value-Added in Exports by the People's Republic of China
Source:
Costs and Benefits of Economic Integration in Asia
Author(s):

Robert Koopman

Robert Wang

Shang–Jin Wei

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199753987.003.0009

The rise of the People’s Republic of China (PRC) in world trade has brought both benefits and anxiety to other economies. For many policy questions, it is crucial to know the extent of foreign value-added (FVA) in exports. This chapter reviews a general formula in Koopman et al. (2008) for computing domestic and foreign contents when processing exports are pervasive. In addition, the chapter develops another formula for slicing up foreign content to allocate it among key individual economy’s supply chains, including sourcing from Japan and the United States (US). By the chapter's estimation, the share of foreign content in exports by the PRC is about 50%. There are also interesting variations across sectors. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly high foreign content (about 80%). By the chapter's estimation, Japan; the US; Hong Kong, China; and the European Union (EU) are the major sources of foreign content in the PRC’s exports of computers and consumer electronics, two of its largest and fastest growing export categories.

Keywords:   domestic content, foreign content, processing exports, duty drawback, domestic value-added in exports, vertical specialization, global production chains, Chinese economy

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