This paper introduces an innovative approach to tracking the evolution toward more complex economies based on their engagement in global production networks. Using input-output matrices, we evaluate the relative importance of specific industries and countries in the concentration and global allocation of value-added. Our analysis of OECD data reveals that the international supply network, as a complex system, transformed significantly from 1995 to 2018. These transformations profoundly impacted income allocation by country and industry, reflecting their diversified roles as intermediate inputs suppliers in global production networks.
In comparison to the simulations presented in the works of Sanabria et al. (2009), Robson et al. (2021), and Dragulescu and Yakovenko (2000), with the method proposed in the next section, we explicitly identify how the economic value was created and allocated as part of a whole process of exchange and transformation at the industry and country levels, highlighting that, regardless the size of the economies and the structure of the final demand, production techniques and the structure of the international supply networks play an important role in resource allocation and concentration of value-added shares.
Evaluate how the changes in the structure of the international supply networks can influence income allocation among countries and industries.
Evaluate how the changes in the structure of the international supply networks can influence income allocation among countries and industries.
We assume that if:
1) The choice of techniques determines the structure of the international supply networks and
2) Changes in production processes might include international fragmentation as outsourcing or offshoring, as well as a change in the proportion of the intermediate inputs used.
Then:
a) More connected industries/countries as intermediate input suppliers will tend to have higher shares of value-added and
b) Economic shocks in industries/countries that directly or indirectly use a more diversified source of intermediate inputs will have a greater impact on the system.
UDG-CUCEA-2024-008
Investigación Teorica
Sector social
This paper uses inter-country input-output tables from 1995 to 2018 (OECD 2021) to show how the evolution of international supply networks helps explain global income creation/allocation patterns.
2022-01-10
2024-11-30
Público
