The emergence of modern communication technologies and declining trade costs have increased the fragmentation of economic activity, with production processes spreading over multiple countries and firms. Traditional trade statistics do not adequately describe the complexity of such global economic interactions. Using state-of-the-art metrics to measure GVCs at the subnational level can help shed light on the links between regions and the global economy.
Regions participate in global production chains directly by supplying inputs for production abroad or relying on foreign inputs to produce goods and services. They can also integrate indirectly into GVCs by supplying to exporting regions or sourcing from other regions' imports within the same country. Examining the value-added component of trade across industries and regions highlights the extent to which regions benefit from participating in global production networks.
