Interconnected Economies

Benefiting from Global Value Chains

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Global Value Chains (GVCs) have exploded in the past decade and refer to the international dispersion of design, production, assembly, marketing and distribution of services, activities, and products. Different stages in the production process are increasingly located across different economies, and intermediate inputs like parts and components are produced in one country and then exported to other countries for further production and/or assembly into final products. The functional and spatial fragmentation that has occurred within GVCs has significantly reshaped the global economic landscape, thereby raising some new major policy challenges for OECD countries and emerging countries alike: trade policy, competitiveness, upgrading and innovation and the management of global systemic risk.

English Also available in: French, Chinese

Measuring trade in value added

The increasing international fragmentation of production that has occurred in recent decades has challenged the conventional perception and interpretation of trade. Traditional measures of trade record gross flows of goods and services every time they cross borders. In a world characterised by global value chains (GVCs), this leads to what many describe as “multiple” counting of trade, which may in turn lead to misguided policy measures. The OECD-WTO estimates of trade in value added (TiVA) can better interpret trade in a world of GVCs. The TiVA Database can also act as an impetus for the production of national statistics that better reflect global interdependencies.

English Also available in: French


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