25 YEARS OF INPUT-OUTPUT

ANALYSIS AT THE OECD:

FROM TECHNOLOGY

SPILLOVERS TO TIVA AND

BEYOND

Andy Wyckoff, Director

Directorate for Science, Technology and Innovation, OECD

25th International Input-output Conference, 20th June 2017

Dedication: Norihisa Sakurai 1957-2015

Nori- pioneer of OECD

IO work,

- IIOA vice-president

- good friend

Three distinct phases:

- 1990s: Structural Change & International technology spillovers

- 2000s: Embodied CO2

- 2010: Trade in Value Added (TiVA) / GVCs

- 2016+

IO for Policy: 3 decades / 3 stages

3

The 1990s

https://www.nytimes.com/2015/08/14/business/dealbook/chinas-renminbi-devaluation-may-initiate-new-phase-in-global-currency-war.html?_r=0

http://www.toyota-global.com/company/history_of_toyota/75years/text/leaping_forward_as_a_global_corporation/chapter1/section1/item1.html

Growth Decomposition for 7 Countries

Technology & Productivity

Investment (GFCF) matrices !

Figure 1.Figure 1. OECD INPUT-OUTPUT SYSTEM

Private

consum

ption

Gov.

consum

ption

GF

CF

Ch

ang

es in S

tocks

Export

s

Gro

ss O

utp

ut

IMPORTS

Compensation of employees

Operating Surplus

Depreciation of Capital

Net indirect taxes

Total Inputs

VA

LU

E

AD

DE

D

IMPORT

INTERMEDIATEMATRIX

DOMESTICINVESTMENT

MATRIX

DOMESTIC

INTERMEDIATE

MATRIX

Investment goods sourced from abroad

IMPORTINVESTMENT

MATRIX

- 10 countries

- 5 benchmark years

- from ≈ 1970 to 1990

- 36 industries

- ISIC Rev.2 (SNA68)

- Current and constant prices

- Investment matrices.

- Data still available on request …

OECD’s first I-O publication - 1995

8

20 years ago on the web

Also available on diskette in the form of 456

Lotus (WK1) files.

Price (book + diskettes):

FF 5000 US$ 910 £ 555 DM 1515

Source = http://replay.waybackmachine.org

- STAN: Output, value added and employment by industry

- BTD: Bilateral trade by industry

- ANBERD: Business R&D expenditure by industry

- STAN-IO: Harmonised national Input-Output tables

The STAN-family of databases emerges

10

2000s

https://guyanachronicle.com/2014/12/01/govt-accepts-doha-amendment-

to-kyoto-protocol-exemplifies-commitment-to-fight-climate-change

• Existing accounting system is based on place of emission - but important and persistent point of contention in identifying “polluter”

• Greenhouse gases emitted by many countries may be embodied in final goods.

• Measuring a nation’s production-based or territorial–based CO2 emissions is not enough.

Consumption-based carbon accounting

Context

Estimating Carbon Embodied in Trade:

https://www.journals.elsevier.com/energy-policy/

1994

6

2003

24

2009 2012

40

60

CO2 emissions: production- and

consumption-based estimates1995-2011

0.0

2.0

4.0

6.0

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12.0

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20.0

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Gt CO2

OECD Consumption-based OECD Production-based

Non-OECD Consumption-based Non-OECD Production-based

Net imports of embodied CO2 by OECD countries

Net exports of embodied CO2 by non-OECD economies

United States

China

EU28

Germany’s demand for motor vehicles 2011, Origin of value added by country and industry

Industries

Chemicals

Non-metallic

minerals

Basic metals

Motor vehicles

Electricity, gas

and water

supply

(Utilities)

http://oe.cd/io-co2

Germany’s demand for motor vehicles 2011, Origin of CO2 emissions by country and

industry – hotspots

Industries

Chemicals

Non-metallic

minerals

Basic metals

Motor vehicles

Electricity, gas

and water

supply

(Utilities)

CO2 hotspotcountries

http://oe.cd/io-co2

Growing recognition

2009

https://en.wikipedia.org/wiki/2009_United_Nations_Climate_Change_Co

nference; https://za.ambafrance.org/Paris-2015-COP-21-COP21-videos

20152014

2010s

http://www.bbc.co.uk/bitesize/ks3/geography/interdependence/globalisation/revision/2/

Global Value Chains:

a well-established concept

2005 2007 2008

2020

Apple’s iPod Teardown:

GVCs simplified

Distribution of the value added

• 299 US$

– 75$ profit to US (Apple)

– 73$ whls/retail US (Apple)

– 75$ to Japan (Toshiba)

– 60$ 400 parts from Asia

– 15$ 16 parts from the US

– 2$ assembly by China

https://www.ifixit.com/Teardown/iPod+Classic+Teardown/595

“We could do that…”

Trade in services

Trade in goods

ICIOBTDIxE

UN ComtradeOECD ITCS

EBTSI

eBOPSTiS

nationalSUTs/IOTs

SNA by activitySTAN, UNSD, Eurostat,

SNA main aggregatesOECD, UNSD, National

harmonised

SUTs/ IOTs

TiVA

IND34VA/PROD

IND34FD

CO2 Jobs/GVCs

HH Cons - COICOP

TourismSatellite

Non-Res direct

22

OECD-WTO TiVA database and GVC

synthesis for Ministers

23

The genome of world trade - 1995Value added in world exports by source country and source industry, 1995

Thank you

The genome of world trade - 2011Value added in world exports by source country and source industry, 2011

TiVA tells us which sectors are the

most global…Foreign value added embodied in domestic demand, by sector,

OECD average, 2011(as a percentage of total domestic demand)

Source: Science, Technology and Industry Scoreboard 2015, forthcoming.

0

10

20

30

40

50

60

70

Textil

es &

ap

pare

l

ICT

& e

lectr

onic

s

Co

ke, petr

ole

um

Moto

r vehic

les

Oth

er

tra

nsport

Ele

ctr

ical m

achin

ery

Basic

meta

ls

Oth

er

man

ufa

ctu

ring

Ch

em

ica

ls

Gene

ral m

achin

ery

Ru

bber

& p

lastic

s

Fabricate

d m

eta

ls

Wood

Tra

nspo

rt &

sto

rage

No

n-m

eta

llic m

inera

ls

Min

ing

Food p

rodu

cts

Agriculture

Re

nting o

f m

achin

ery

Pape

r, p

rint, p

ub

lsh

Utilit

ies

Whole

sale

& r

eta

il

Ho

tels

& r

esta

ura

nts

IT s

erv

ice

s

Co

nstr

uction

Oth

er

serv

ices

Post &

te

lecom

s

Fin

ance &

insura

nce

Oth

er

busin

ess…

Public

adm

in

He

alth

Education

Re

al esta

te

% OECD foreign value added Non-OECD foreign value added 1995

… the extent to which consumption

relies on foreign value added ..

Foreign value added in domestic consumption, by source region, 2011As a percentage of total domestic consumption

Source: OECD Science, Technology and Industry Scoreboard 2015.

…that exports require imports…Foreign value-added content of gross exports (%)

Electrical and optical equipment (30t33)

28

0

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20

30

40

50

60

70

VN

M

KHM

SGP

THA

HU

N

CZE

SVK

MEX IR

L

MYS

PRT

PHL

NLD FIN

TWN

CHN

AU

T

KOR

SVN

SWE

GRC PO

L

CHE

BEL

DN

K

ESP

CAN

ZAF

ISR

TUR

FRA

IDN

GBR IT

A

DEU IN

D

JPN

AU

S

BRA

RUS

USA

2008 1995

Thank you

…and services matter…

29

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

IDN

CH

N

CH

L

ME

X

RU

S

NO

R

BR

A

CA

N

ZA

F

KO

R

SV

K

CZ

E

AU

S

JPN

HU

N

PO

L

SV

N

NLD

TU

R

NZ

L

ITA

DE

U

US

A

CH

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ES

T

FR

A

ISR

AU

T

SW

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PR

T

FIN

IND

DN

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BE

L

ES

P

GB

R

ISL

IRL

GR

C

LU

X

Domestic content Foreign content SNA total service export share

Services Value-Added: % of exports, 2009

…even for manufactured goods...

30

Exports of electrical and optical equipment (30t33), 2009

Service value added content, %

0

10

20

30

40

50

60

NLD FIN

SWE

FRA

ITA

IND

DE

U

GR

C

BE

L

NZL

SGP

TU

R

IRL

SVK

CH

E

PO

L

ESP

AU

T

ISR

CZE

KO

R

JPN

LUX

PR

T

ZAF

SVN

NO

R

EST

ME

X

GB

R

ISL

DN

K

CA

N

CH

N

AU

S

HU

N

IDN

RU

S

USA

2009 1995%

…and via TiVA

new trade patterns emerge.

31

0

5

10

15

20

25

CHN USA JPN KOR DEU TWN MEX THA SGP GBR MYS CHE FRA ITA

Gross Exports (EXGR) Domestic Value Added in Foreign Final Demand (FDDVA)%

Shares of world exports in gross and value added terms,

Electrical and optical equipment (30t33)

Jobs in the business sector sustained by

foreign final demand, 1995 and 2008

As a percentage of total business sector employment

Source: OECD Science, Technology and Industry Scoreboard 2013.

http://dx.doi.org/10.1787/888932904469

0

10

20

30

40

50

60

70

LU

X

ES

T

IRL

SV

K

HU

N

BE

L

SV

N

CZ

E

CH

E

SW

E

AU

T

DN

K

NL

D

NO

R

FIN

DE

U

PO

L

KO

R

ITA

CH

N

PR

T

CA

N

FR

A

GB

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RU

S

TU

R

ES

P

GR

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IND

ME

X

IDN

JP

N

AU

S

US

A

BR

A

%

2008 1995

Jobs in the business sector sustained by foreign final demand, by region of demand, 2011

As a percentage of total business sector employment

Source: OECD Science, Technology and Industry Scoreboard 2015.

…by region of demand…

• Report on “Inclusive Global Value Chains for Small and Medium Enterprises and Low-Income Developing Countries”

• G20 Strategy for Global Trade Growth

G20 Dialogue includes GVCs and TiVA

35

January 2013

40 countries18 industries3 years

May 2013

57 countries18 industries5 years

October 2015

61 countries34 industries7 years

December 2016

63 countries34 industries17 years

Underlying ICIO tables:

6.9 million cells per year

2016+

Some particular features of ICIO

– Accounting for firm heterogeneity in manufacturing:

Split tables for China & Mexico (processors, other exporters

and non-exporters)

Moving away from the import proportionality assumption

– Separation of “direct purchases by non-residents”

from cross-border trade:

Enables Tourism policy analysis

– Allocation of domestic trade and transport margins

from manufacturing output to services:

Emphasizes the service content of manufactured exports

It can be dirty work…

37

…but its all worth it.

– High level of interest in TiVA worldwide

– Huge renewed interest in IO as a policy tool

– Expanding IO related academic research

around the world

– Many national stats offices motivated to improve

their national statistical infrastructures to better

account for global perspective

However, challenges meeting all demands

– Too many indicators !!! v. Not enough indicators !!!

Two distinct user communities

Power users:

“Just give me the data…”

IO practitioners: Too many indicators !!!

Intermediate use

ctry 1 x ind 1 […] ctry 71 x ind 34 HH NPISH GOV GFCF INVNTNON-

RESDISC

country 1 x industry 1…..country 1 x industry 34…..…..country n x industry 1…..country n x industry 34…..…..country 71 x industry 1…..country 71 x industry 34

Value added (+ taxes -

subs on intermediate products)VA

Output X

Note : FD = Total final expenditures + discrepancy (i.e. exports

to unspecified partners)

Final DemandOutput

Z FD X

OECD, Inter-Country Input-Output (ICIO) Tables, 2016 edition

Get them here: http://oe.cd/icio

Two distinct user communities

Powerful users: “What’s the bottom-line?

The mainstreaming of IO at the OECD

Analyses of GVCs (OECD Committee for Industry and Entrepreneurship)

Numerous Trade policy papers (OECD Trade Committee)

OECD Country Studies (Economic Policy Committee)

OECD Skills outlook (Education Committee)

Steel and GVCs (OECD Steel Committee)

Shipbuilding (OECD Shipbuilding Committee)

Tourism (OECD Tourism Committee)

Embodied CO2 and material flows (OECD Environment Committee)

Role of SMEs in GVCs (Committee for Statistics and Statistical Policy

Digital economy? (OECD Committee for Digital Economy Policy)

Innovation spillovers? (OECD Committee for Science and Technology )

Non-IO experts: More indicators please

“Simple to understand”, with 3 dimensions: country, partner, industry

http://stats.oecd.org/Index.aspx?DataSetCode=TIVA2015_C1

code description CN Fig.

EXGR_DVASH Domestic value added share of gross exports 2

EXGR_FVASH Foreign value added share of gross exports 1,3

EXGR_FNLDVASH Domestic value added in exports of final products as a share of total gross exports 2

EXGR_INTDVASH Domestic value added in exports of intermediate products as a share of total gross exports 2

EXGR_INTDVApSH Domestic value added in exports of intermediate products, partner shares 8

EXGRpSH Gross exports, partner shares 7

EXGR_DVApSH DVA in gross exports, partner shares

EXGR_TDVAIND Industry domestic value added contribution to gross exports 3

EXGR_TFVAIND Industry foreign value added contribution to gross exports 3

EXGR_SERV_DVASH Domestic services VA content of gross exports 9

EXGR_SERV_FVASH Foreign services VA content of gross exports 9

IMGRINT_REII Re-exported intermediate imports as % of intermediate imports 4

IMGRpSH Gross imports, partner shares 7

FFD_DVApSH Domestic value added in foreign final demand, partner shares 7

DFD_FVApSH Foreign value added in domestic final demand, partner shares 7

VALUX_FFDDVA Domestic value added embodied in foreign final demand, as share of total value added 5,6

PROD_VASH Value added as a % of production

FD_VASH Value added share of total final demand by source country and industry

CONS_VASH Value added share of total consumption by origin 12

GFCF_VASH Value added share of gross fixed capital formation by origin

The TiVA indicator challenge

To produce “core indicators” with 3 dimensions:

Country, Industry, “Partner”

– means reducing 8 dimensions

• Origin of Value added by country and industry

• Exporter by country and industry

• Importer by country and industry

• Final demand by country and industry

So many variations !

DIY: data cubes with 4 dimensions developed:

• Origin of value added (by country and industry) in

• gross exports, gross imports and final demand

TiVA / ICIO: Next steps – from 2017

• Always demand for more countries (Africa?!) and,

more recent years

• New version being developed based on ISIC Rev.4

(NACE Rev.2) and latest SNA 2008 / BPM6 inputs

• Nowcasting: for more timely information, develop

methods for extrapolating TiVA indicators to provide

figures for more recent years (t-1 rather than t-3).

• Better accounting for firm heterogeneity – beyond

China and Mexico Linking trade, SNA and business

statistics? Fruits of extended SUTs project

45

The OECD working environment

(v. Academia)

• Research agenda and priorities determined by:

• 200+ OECD Committees and their Working Parties.

- Access to leaders (via G20 / G7)

• G20 broadens access to non-members

- Strong links with regional/international orgs

• (UN, WTO, EU, APEC etc)

- Direct working relations with officials in Ministries

- Active engagement with statistical agencies

We stand of the shoulders of many.