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Clustering Value-Added Trade: Structural and Policy Dimensions

Escaith, Hubert and Gaudin, Hadrien (2014): Clustering Value-Added Trade: Structural and Policy Dimensions.

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Abstract

The paper uses exploratory data analysis to propose a typology of exporters according to the value-added content of their exports as well as other economic and trade policy characteristics. In the process, it defines clusters of countries according to the multi-dimensional criteria defined by value-added, economic and trade policy indicators. Results show that natural resources and services orientation are among the most determinant variables. The level of economic development remains a crucial determinant of the Trade in Value-Added profile, more than the sheer size of the economy. Pro-active value-chain up-grading strategies foster a higher foreign content in exports, compensating the lower domestic margin by higher volumes. Protectionist policies are not particularly successful in increasing higher share of domestic content, except in services exports; but in this case, volumes remain marginal.

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