Analysis of Value Added Trade and Intermediates Exports of Commonwealth Countries and Comparator Groups

This paper provides an overview of two important aspects of value chain participation of Commonwealth countries: domestic value addition in exports and trade in intermediate goods. It compares this with global and regional trends and furthermore examines these indicators for other country groupings in which Commonwealth members are prominently represented. Examining these indicators allows for a more complete and accurate picture of what has been termed ‘GVC (global value chain) trade’, i.e. trade in a world of increasingly vertically integrated supply chains where comparative advantage resides in tasks rather than entire finished goods. We find regarding domestic value added in exports, we find that Commonwealth members have been increasing these during the time period under investigation at approximately the rate of the world average, but slightly faster than for OECD economies. Among the top performing Commonwealth members, Zambia, Ghana and India are notable for seeing rapid increases in both domestic and foreign value added. In terms of intermediate goods trade, again Commonwealth members increased exports at approximately the rate of the world average. Commonwealth members also moderate increases in their trade with other Commonwealth members, relative to non-Commonwealth members. However, this mirrors a trend among all regions and groupings, where intra-group trade in inputs has become more important. Finally, in looking at groups of intermediates, the growing significance of intra-Commonwealth trade in industrial goods, fuels and transport goods trade has been particularly pronounced.