World Trade and World Production Mike Berends-Ballast Jan van Laaden.
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Transcript of World Trade and World Production Mike Berends-Ballast Jan van Laaden.
World Trade and World Production
Mike Berends-Ballast
Jan van Laaden
Problem
• Merchandise export figures are only weakly linked to economic activity in the Netherlands
• Merchandise production overstates economic activity in the Netherlands
• Both growing problems because of globalisation
Merchandise exports - scope
• Include:– Exports of domestically produced goods– Re-exports (imported goods exported after
some processing)
• Exclude:– Goods in transit– Quasi-transit (like re-exports but no change of
ownership)– Transito trade (merchanting?)
Exports and Re-Exports (Billion €)
Domestic Exports
Re-exports Re-exports / Total Exports
2002 135 98 42
2003 136 98 42
2004 145 111 43
2005 161 121 43
Trade problems (1)
• Export – import – re-export
– Drugs in bulk from A, sent to B for packaging, imported and subsequently re-exported.
– Double counting – twice in imports and twice in exports T
Trade problems (2)
• Contract processing
– Country A sends goods to country B for processing. Country A supervises the processing and retains ownership
– The processing enterprise may be an affiliate or it may be an independent firm
– Included in country A’s exports even though almost all the value added occurred abroad
Trade problems (3)
• Distribution centres– Goods – e.g. cars – imported into Netherlands and
owned by the distribution centre. The cars are subsequently exported to other countries
– Overstatement of Netherlands exports
– The car producer decides to retain ownership of the cars while in the distribution centre
– The cars now become quasi-transit and should be excluded from trade statistics
Production problems
• Contract processing– When country A sends goods to country B for
processing, retaining control of the work and ownership of the goods, the value of the processing work appears as production in both countries
– Netherlands production is 10% overstated
Recommendations
• Exports– Separate re-exports and exports from domestic
production– Record both total value and value added of re-exports– Record quasi-transit trade
• Production– Record separately sales of goods made under
contract abroad– Distinguish between intra-firm and extra-firm
processing abroad
World Re-exports and production abroad Billion US$
Minimum estimate of re-
exports
Maximum estimate of re-
exports
Production abroad
European Union 493 1359 22
World 804 2249 27
Comments
• Ownership not relevant for international trade statistics (ITMS 1998). Quasi transit not a problem!
• What is value-added? Increase in value or national accounts definition?
• Use “net exports” for goods typically re-exported – chemicals, transport and other machinery.