Measuring Exposure to Risk in Global Value Chains
How exposed are countries and sectors to GVC risks? GVC participation matters for answering this question. Standard approaches either overstate the degree of backward integration or underestimate the involvement of some industries, especially services, in Global Value Chain (GVC) activity. To c...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/476361632831927312/Countries-and-Sectors-in-Global-Value-Chains http://hdl.handle.net/10986/36314 |
| Summary: | How exposed are countries and sectors to GVC risks? GVC
participation matters for answering this question. Standard
approaches either overstate the degree of backward integration
or underestimate the involvement of some industries,
especially services, in Global Value Chain (GVC) activity.
To correct these biases, this paper proposes a novel comprehensive
method to measure GVC participation using
Inter-Country Input-Output (ICIO) linkages in both
trade and output and shows that these improvements in
methodology matter from a macroeconomic perspective.
GVC integration, as measured by the indicators, decreases
the exposure to domestic shocks and increases that to global
shocks. The paper also finds that exposure to shocks is complex:
in most countries and sectors, output is simultaneously
exposed to supply and demand shocks. This two-sided exposure
suggests that disruptions may not be easily managed
by unilateral policy attempts at forcing a reorganization of
buyers-seller relationships. |
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