An Anatomy of U.S. Establishments’ Trade Linkages in Global Value Chains

RePEc Short ID: pfl154
ORCID iD: 0000-0002-4852-3287

Flaaen, Aaron; Kamal, Fariha; Lee, Eunhee; Yi, Kei-Mu

doi:10.24149/wp2419

Working Paper

An Anatomy of U.S. Establishments’ Trade Linkages in Global Value Chains

Abstract: Global value chains (GVC) are a pervasive feature of modern production, but they are hard to measure. Using U.S. Census microdata, we develop novel measures of the linkages between U.S. manufacturing establishments’ imports and exports. We document three new GVC patterns. First, for every dollar of exports, imported inputs represent 13 cents in 2002 and 20 cents by 2017, substantially higher than what aggregate data suggests. Second, we find strong complementarities between input and output markets reflected in “round-trip” trade linkages where an establishment sources inputs from and exports output to the same country. Third, we find a strong positive association between regional trade agreements and GVC trade flows. The aggregate data used to build global input-output tables requires proportionality assumptions that we find mute these relationships. Finally, with a global firms model, we show that the roundtrip results are consistent with a notion of country-specific fixed costs that are at least partially common between sourcing (imports) and foreign sales (exports).

Keywords: global value chains; manufacturing; exports; imports; establishments; microdata;

JEL Classification: F1; F14; O51;

https://doi.org/10.24149/wp2419