Trade Measures—Relationships and Implications

Abstract

ABSTRACT Various value‐added trade measures have been developed to address the concern in the growing volume of trade in intermediates that are double counted when crossing international borders more than once. This paper raises a query and makes an inquiry into the query. How trade figures in these measures would look like if comparisons are made in net terms and in the context of trading with the rest of the world, given that some double counted elements offset themselves in a series of crossing border processes in opposite traffic? Examined among them in this study are domestic value added in gross exports and value‐added exports vis‐à‐vis gross exports. Issues have been identified in aggregation that the ways in which aggregation is made lead to different aggregate statistics with the same measure and between various trade measures, which causes no complications for gross trade statistics regardless of the ways of aggregation. Moreover, aggregation could potentially cause size biases. Despite the potential problems, they may help identify sources of imbalances and mitigate trade disputes between countries, though to reduce trade deficits via these channels would be extremely challenging. Value‐added exports of individual countries with an aggregate rest of the world are credited for yielding the same figures as gross exports in net terms, adding up to GDP consistently while removing double counted elements. Germany's trade with selected individual countries and the rest of the world is scrutinized to exemplify the trade figures in these trade measures, the differences between them and their implications.