Foreign trade statistics based on value added challenge the traditional picture of international trade

Abstract

Foreign trade statistics based on value added follow the value added by each country and sector through the different phases of the production process. A new database maintained by the OECD and WTO provides a different picture of the imbalances in trade flows between the major economic regions and the interdependency of imports and exports than that provided by traditional customs statistics. This article also examines imbalances in euro area trade on a value-added basis. Statistics based on value added do not displace the traditional gross foreign trade statistics, but offer an alternative way to examine the importance of foreign trade, particularly for those countries that are integrated into global value chains.