The nature and growth of vertical specialization in world trade
Dramatic changes are occurring in the nature of international trade. Production processes
increasingly involve a sequential, vertical trading chain stretching across many countries,
with each country specializing in particular stages of a good's production sequence. We
document a key aspect of these vertical linkages—the use of imported inputs in producing
goods that are exported—which we call vertical specialization. Using input–output tables
from 10 OECD and four emerging market countries we calculate that vertical specialization …
increasingly involve a sequential, vertical trading chain stretching across many countries,
with each country specializing in particular stages of a good's production sequence. We
document a key aspect of these vertical linkages—the use of imported inputs in producing
goods that are exported—which we call vertical specialization. Using input–output tables
from 10 OECD and four emerging market countries we calculate that vertical specialization …
Dramatic changes are occurring in the nature of international trade. Production processes increasingly involve a sequential, vertical trading chain stretching across many countries, with each country specializing in particular stages of a good’s production sequence. We document a key aspect of these vertical linkages — the use of imported inputs in producing goods that are exported — which we call vertical specialization. Using input–output tables from 10 OECD and four emerging market countries we calculate that vertical specialization accounts for 21% of these countries’ exports, and grew almost 30% between 1970 and 1990. We also find that growth in vertical specialization accounts for 30% of the growth in these countries’ exports.
Elsevier