Patterns of Vertical Specialisation in Trade: Long-run Evidence for 91 Countries

Stefan Pahl, Marcel P. Timmer

Research output: Working paperAcademic

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We estimate the domestic value-added content in exports of manufacturing goods (VAX-D ratio) for 91 countries over the period from 1970 to 2013. We find a strong decline in the world VAX-D ratio since the mid-1980s mostly accounted for by the substitution of foreign for domestic intermediates. Using a breakpoint detection method, we identify three waves of vertical specialisation in the world economy: 1970-79, 1986-95 and 1996-08. We find that most countries (79) initiated a period of vertical specialisation at least once. We find strong evidence that the VAX-D ratio correlates negatively with GDP per capita, and that the negative slope is flattening out at higher levels of income.
Original languageEnglish
Publication statusPublished - 2019

Publication series

NameGGDC Research Memoranda
PublisherGroningen Growth and Development Center

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