Decomposition of Poland's Bilateral Trade Imbalances by Value Added Content

Abstract

Objective: The objective of this paper is to present differences in Poland’s bilateral trade balances in gross terms and in value added terms in 1995-2011, as well as an explanation of such differences.

Research Design & Methods: It was decided to explain why Poland’s bilateral trade balances in gross terms and value added terms differ. The calculations were made using the World Input-Output Database (WIOD), based on the input-output approach.

Findings: In the years 1995-2011, Poland’s trade with the majority of the countries was characterised by widening gaps between balances in gross terms and those in VA terms. The decomposition of bilateral trade balances by VA content demonstrated that the differences in the value of trade balances in gross terms and in VA terms had been mostly determined by two components: ‘multilateral VA net exports to third countries via partner’ and ‘foreign VA in net exports from other countries than partner’.

Implications & Recommendations: To appraise benefits from Poland’s bilateral trade better it is recommended to use the decomposition of trade balances by value added content.

Contribution & Value Added: The originality of this work lies in the decomposition of Poland’s bilateral trade balances by value added content. Such a decomposition allows to identify factors driving Poland’s bilateral net exports. Article

Keywords

gross trade balance, value added trade balance, Poland, inputoutput tables

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