A Simple Model of Global Value Chains

Nowadays most of the production processes are composed of different tasks performed by several geographically separated economic agents with its profound impact similar to what observed regarding the division of labour. This system of global production sharing, which is known as Global Value Chains (GVCs), is eventually forming an extensive network of economic values or value added that explains the changing nature of international trade & development. In this context, the gross nature of imports and exports data is such that it cannot provide any direct information about the foreign and domestic value added to an economy. Analysis of value-added trade requires much more sophisticated data like TiVA and WIOD. Nonetheless, we can get some indirect indications about the GVC phenomenon through a set of analytic refinements based on gross trade data and its informed classifications.