Implications of Global Value Chains for Trade Statistics and Trade Policy

The last three decades saw the creation and intensification of global value chains due to changed business models. Today, the production of final goods often requires performing several tasks across countries. This chapter describes the factors that have led to “trade in tasks” and explains the biases of traditional trade statistics in depicting this new trade reality. Approaches to correct these biases by estimating trade in value added are described with their respective statistical challenges. Changing the perspective from a “gross” reporting to a “value added” angle has implications on trade indicators. Some common considerations are revisited, such as the importance of services, interpretation of trade balance, export competitiveness, and risks associated with increased interdependencies between economies. Traditional rules and principles may also be put into question. The chapter concludes with some directions for trade policy to foster participation in global value chains.