Global Value Trees

TL;DR

This paper introduces global value trees (GVTs) derived from the World Input-Output Database to better understand the structure of global value chains, revealing they are more tree-like than chain-like and proposing an industry importance measure.

Contribution

It develops a novel method to characterize global value chains as trees and introduces an industry importance measure based on GVTs, enhancing understanding of global production networks.

Findings

GVCs are better represented by tree structures than chains.

GVTs provide a new way to measure industry importance.

Comparison with other centrality measures shows GVTs' effectiveness.

Abstract

The fragmentation of production across countries has become an important feature of the globalization in recent decades and is often conceptualized by the term, global value chains (GVCs). When empirically investigating the GVCs, previous studies are mainly interested in knowing how global the GVCs are rather than how the GVCs look like. From a complex networks perspective, we use the World Input-Output Database (WIOD) to study the global production system. We find that the industry-level GVCs are indeed not chain-like but are better characterized by the tree topology. Hence, we compute the global value trees (GVTs) for all the industries available in the WIOD. Moreover, we compute an industry importance measure based on the GVTs and compare it with other network centrality measures. Finally, we discuss some future applications of the GVTs.