Unit 4 Macro: Smarter Ways of Measuring Trade in a Globalised World

To fully understand trade, we must understand the value added at each stage ...... a crucial line in a new report from the OECD on the challenges of measuring the value of trade in a globalised world with deeply integrated supply chains. This is an important issue, traditional trade data rarely tells us the full story - a key evaluation argument that can be made in Unit 4 macro papers.For example, the OECD report finds that one-third of the total value of motor vehicles exported from Germany actually comes from other countries, while nearly 40% of the total value of China’s electronics exports come from foreign sources.

New analysis from the OECD and WTO breaks with conventional measurement of trade flows to reflect the way businesses increasingly disperse production chains across several countries. By looking at imports and exports in value-added terms, a fuller picture can be built up of international trade and commercial relations between nations.