Measures of Participation in Global Value Chains and Global Business Cycles

Abstract

This paper makes two methodological contributions.First, it proposes a framework to decompose total production activities at the country, sector, or country-sector level, to different types, depending on whether they are for pure domestic demand, traditional international trade, simple GVC activities, and complex GVC activities.Second, it proposes a pair of GVC participation indices that improves upon the measures in the existing literature.We apply this decomposition framework to a Global Input-Output Database (WIOD) that cover 44 countries and 56 industries from 2000 to2014 to uncover evolving compositions of different production activities.We also show that complex GVC activities co-move with global GDP growth more strongly than other types of production activities.

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