International Trade: Theory and Policy Lab Session: Trade Data

Department of Economics - University of Roma Tre
Academic year: 2014-2015
International Trade: Theory and Policy
Lab Session: Trade Data
Prof. Silvia Nenci
[email protected]
Prof. Luca Salvatici
[email protected]
Lecture topics
There exists a large variety of data sources for trade data:
Standard Trade databases
Aggregated trade data:
Disaggregated trade data:
• WITS - UN Comtrade
• Eurostat- Comext
Firm level
• Several dbs (mainly country based)
New data on trade in value added
• TiVA
Aggregated trade data
The IMF’s Direction of Trade Statistics (DOTS) is the primary
source of aggregated bilateral trade data (value of exports
and imports between countries and their trading partners),
186 countries, time period 1980-today.
Data are from countries’ Balance of Payments.
Disaggregated trade data: Trade
To determine which nomenclature is used (i.e. how goods are
Several trade nomenclatures and classification systems exist:
1. the Harmonized System (HS) in which all member countries
of the World Customs Organization (WCO) report their
trade data to UNCTAD. Tariff schedules and systems of rules
of origin are also expressed in the HS. 4 harmonized levels,
by decreasing degree of aggregation (increasing detail).
2. Trade data are also sometimes classified using the Standard
International Trade Classification (SITC). Adopted by the
United Nations, the SITC Rev. 4 has five levels (digit).
Concordance tables between these nomenclatures exist.
Disaggregated (by commodity) trade
World integrated Trade Solutions (WITS)- UN Comtrade
• Developed by the World Bank, the United Nations
Conference on Trade and Development (UNCTAD),
International Trade Center (ITC), United Nations Statistical
Division (UNSD) and the World Trade Organization (WTO).
• It contains merchandise trade exports and imports by
detailed commodity and at up to the HS 6 level for over 170
countries since 1962. Trade values and volumes.
• WITS also includes tariff data and convert data between
different nomenclatures.
COMEXT is the Eurostat reference database for international trade.
External trade statistics of Member States, Candidate Countries (Albania, Iceland,
Montenegro, Serbia, Macedonia, Turkey) and EFTA countries (Iceland, Liechtenstein,
Norway and Switzerland). Trade flows (import, export) and balance, product, of EU
countries to partner country.
Aggregated data: value, volume, unit value (a monthly and annual basis).
Coverage – Time: since 1999
Detailed data: record the monthly and annual trade (imports and exports) for the
European Union and the euro area as well as for each EU Member State and EFTA
countries. Data are disseminated by single declaring country and by single partner,
at the most detailed level of several product nomenclatures (CN, HS, SITC, BEC,
CPA, etc). Trade value & trade quantity.
Coverage – Time: from 1988 onward
Firm level dataset
Many databases (usually country based).
Some examples:
Exporter Dynamics Database
Exporter characteristics and dynamics in 45 developed and
developing countries. The database mainly covers 2003-2009,
though data from the 1990s are also available for some countries.
The data are comparable across countries. Measures cover the
basic characteristics of exporters (their numbers, size and
growth), their concentration and degree of diversification in
products and markets, their dynamics in terms of entry, exit and
survival, and the average unit prices of the products they trade
(Cebeci, T., Fernandes, A., Freund, C. and M. Pierola (2012). "Exporter
Dynamics Database," World Bank Policy Research Working Paper 6229).
Firm level dataset - 2
EU-EFIGE/Bruegel-UniCredit dataset
A unique firm-level database of representative samples of
manufacturing firms (with a lower threshold of 10 employees)
across European countries.
The database combines measures of firms’ international activities
(eg exports, outsourcing, FDI, imports) with quantitative and
qualitative information on about 150 items ranging from R&D and
innovation, labour organisation, financing and organisational
activities, and pricing behaviour.
Almost 15,000 surveyed firms in 7 European economies (Germany,
France, Italy, Spain, United Kingdom, Austria, Hungary).
Data was collected in 2010, covering the years from 2007 to 2009.
Trade in value added data
• The increasing international fragmentation of production has challenged
the conventional wisdom on how we look at and interpret trade.
• Traditional measures of trade record gross flows of goods and services
each and every time they cross borders leading to a multiple counting of
trade, which may lead to misguided empirical analyses (Cattaneo et al.,
2013, OECD-WTO 2012).
• The shortcomings of gross trade statistics have been well recognized
(Hummels and others, 2001; Ando and Kimura, 2003; Koopman and
others, 2008 and 2011; Breda and others, 2008; and Bems and Johnson,
2012). Case studies of global value chains in industries have provided
examples of the discrepancy between gross and value-added trade (see
for instance Dedrick et al. 2008 for the Apple iPod).
• Furthermore, since nowadays a large number of countries has developed
comparative advantages in specific parts of the value chains and not
necessarily on final goods, standard trade statistics are becoming
much less informative.
What is Trade in Value-Added?
Trade in value added: value that is added by a country in the production of any good
or service that is exported.
Country A exports $100 of goods, produced entirely within A, to country B that
further processes them before exporting them to C where they are consumed.
B adds value of $10 to the goods and so exports $110 to C.
Conventional measures of trade show that:
- total global exports and imports of $210.
- C has a trade deficit of $110 with B, and no trade at all with A, despite the fact
that A is the chief beneficiary of C’s consumption.
What is Trade in Value-Added? 2
If instead we track flows in value-added, one can recalculate:
- The value-added generated in their production is $110;
- C’s trade deficit with B on the basis of the value-added it "purchases" from B as
final demand, that is equal to $10;
C’s trade deficit with A, that is equal to $100.
How to measure Trade in Value-Added
• To measure trade in value added, we need to follow goods through
the global supply chain from input producers to final consumers,
allocating the value added in final goods to producers at each
• Recent work has combined national input-output tables with
bilateral trade data to construct input-output tables with global
The key sources for value-added trade
Data sources
World Input-Output
Database (WIOD)
National supplyuse tables
National inputoutput tables
I-O tables
submitted by GTAP
57 plus China
processing trade
1995, 2000,
2005, 2008,
•Daudin et al. (2011)
1997, 2001,
• Johnson and Noguera
• Koopman, Wang, and
Wei (2013)
1. Using the TRAINS-WITS dataset
find what are the main export and import flows by commodity (HS
2002, Standard Product Groups) for the following countries in the
year 2013 (create a ranking for each country):
2. Using Excel and the TRAINS-WITS dataset, calculate the
Revealed Comparative Advantage index in natural resources
(SITC rev.3) of the following countries in the year 2007:
3.Saudi Arabia
4.South Africa
where: xij is the export of product j from country i and Xi is the total
exports of country i; xwj is the world export of product j and Xw is
the world exports.
The relevant natural resources product groups
(WTO’s International Trade Statistics – SITC rev.3)
Natural Resources & International Trade
From theory to empirical evidence
How to measure comparative advantage
The Comparative advantage index: the traditional measure is the
Revealed Comparative Advantage (RCA) index (Balassa, 1965). It is a
ratio of product j’s share in country i ’s exports to its share in world
= ( )
Where: xij is the export of product j from country i and Xi is the total
exports of country i; xwj is the world export of product j and Xw is the
global exports.
A value of the RCA above 1 in good (or sector) j for country i means that
i has a revealed comparative advantage in that sector
Advantage: ability to derive a workable measure of each country’s
comparative advantages as they are revealed in trade data