From exports to value added to income: Accounting for bilateral income transfers

Timon Bohn*, Steven Brakman, Erik Dietzenbacher

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

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The existence of multinational firms and the rise of global value chains raise the question how international trade contributes to a country's income. Ownership relations between, for example, headquarters and subsidiaries result in international income transfers. These transfers are ignored in standard trade data. Taking them into account in a global input-output analysis allows us to assess how much income is generated in one country due to the consumption of final products in another country. This provides a new perspective compared to the concept of value-added exports introduced by Johnson and Noguera (2012). For the US, we find that the income generated by foreign consumption is 51% higher than the value added in the US that is generated by foreign consumption. Similar findings hold for other countries as well, but to a lesser extent. The implication is that the current account deficit of the US almost disappears from the income perspective.

Originele taal-2English
Artikelnummer103496
Aantal pagina's16
TijdschriftJournal of International Economics
Volume131
Vroegere onlinedatum29-mei-2021
DOI's
StatusPublished - jul-2021

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