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Research notes · Trade

When a country exports, how much of the value was actually made there — and how far does the usual export statistic mislead us?

Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research

Robert C. Johnson (2014) · Journal of Economic Perspectives 28(2)

Article ↗ · Replication data ↗ (openICPSR)

The archive requires an account we do not hold, so the files were not opened. What follows rests on the published abstract and on this platform's own observations.

What the authors found

Johnson shows that because production is split across supply chains, gross exports overstate what a country actually contributes. He puts the gap between gross and value-added exports at roughly 25 per cent and growing, and shows that manufacturing looks more important relative to services in gross terms than in value-added terms — so the standard statistic distorts not only how big trade is but what it is made of.

What our data adds

Computed independently on Eurostat FIGARO for 2024, across 27 EU reporters, domestic value added is 63.4 per cent of gross exports. Foreign content is therefore 36.6 per cent — larger than the roughly 25 per cent Johnson reported a decade ago, which is the direction he predicted. The spread between countries is wider than the average suggests: Germany retains 73.8 per cent of the value it ships, Spain 72.5, while Ireland retains 52.2 and Belgium 54.6. A ranking of exporters by gross value and one by value added are not the same ranking, and the gap is biggest exactly where the policy interest is.

Domestic value added in exports, EU reporters

Published in thousands of euro against gross exports in millions - the unit trap the note describes.

FigureValueIndicator
Domestic value added as a share of gross exports, EU27, 2024 63.4% FIGARO.DVA_EXP
Implied foreign content 36.6% FIGARO.GROSS_EXP
Germany, value added retained 73.8% FIGARO.DVA_EXP
Ireland, value added retained 52.2% FIGARO.DVA_EXP

Every figure here is computed from observations in this database and can be charted, downloaded or queried.

What this cannot show

These two numbers are not directly comparable and should not be read as a measured trend. Johnson's 25 per cent is global and rests on mid-2000s input-output tables; ours is 27 EU reporters in 2024, an economy more fragmented than the world average. The comparison is suggestive of the direction, not a measurement of it. Note also the unit trap this dataset sets: FIGARO publishes gross exports in millions of euro and value added in thousands, so comparing the two columns without converting is wrong by a factor of a thousand and produces plausible-looking numbers.

The data behind it

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