TRADE IN VALUE ADDED: HUNGARY

Transcription

1 TRADE IN VALUE ADDED: GARY The international fragmentation of production in global value chains (GVCs) challenges the way we look at the global economy. Today, what you do - the activities a firm or country is involved in - matters more for growth and employment than what you sell - the products that make up final sales or exports. Understanding how GVCs work and how they affect economic performance is essential, as is determining which policies help derive the greatest benefits, and reduce the risks. The OECD-WTO Trade in Value Added (TiVA) database facilitates analysis of GVCs by measuring trade in value-added terms to generate new insights about the commercial relations among economies and the process of value creation. Drawing on the third version of the TiVA database, this note describes Hungary s trade patterns in value-added terms, with a view to informing policy debates in a range of areas, including trade, innovation, and investment. Accompanying this note is a User Guide designed to assist interpretation and provide context to the indicators presented: Key findings Hungary is significantly integrated within global value chains, with nearly half (48.) of the total value of exports reflecting foreign content, the second highest share in the OECD after Luxembourg. A significant part of this integration occurs via German value-chains which imported one-fifth of all Hungary's intermediate exports in value-added terms in Hungary's manufacturers had the third highest rates of export orientation in the OECD, with over 8 of total domestic value-added driven by foreign final demand, and rates of over 9 in its key export sectors: ICT & Electronics and Motor Vehicles. Similarly nearly three-quarters (70.7%) of all intermediate imports were used to produce exports, with over 9 in ICT & Electronic products and over 8 in motor vehicle parts. Over half the value of exports (51.4%) reflected services value-added in 2011, somewhat below the OECD average.

2 The role of foreign and domestic value added in exports Nearly half (48.) of the value of Hungary's exports in 2011 reflected foreign content, up on the recent crisis low of 44.7% in 2009 and 18.7 percentage points higher than Figure 1. Foreign value added content of gross exports by country percent, 2008, 2009, and 2011 (right insert = time series for Hungary) Of Hungary's total exports of domestic value-added in 2011, 58. reflected exports of intermediates, higher than the equivalent share 45. in 2009, in part reflecting the rebound in GVCs which were disproportionally affected by the crisis, and higher than in 1995 (47.6%) (Figure 2). Hungary s share of intermediate input in total exports of domestic value added was lower than the OECD average (61.). Figure 2. Domestic value added content of gross exports by end-use category by country percent, 1995 and Intermediate goods and services 2011 Final goods and services 2011 Total 1995 Intermediate goods and services

3 Agriculture Wood & paper Non-metallic minerals Other manufactures Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Other services Total Agriculture Wood & paper Non-metallic minerals Other manufactures Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Other services Direct exports by the Wholesale, retail & hotels industry (reflecting tourism and upstream distribution services) generated the greatest source of domestic value added in 2011, accounting for 7.3% of the total value added of exports. The next three most important industries were at 5., Business services at 4.8%, and at 4., (Figure 3a). The largest foreign contributions were in the ICT & electronics and industries, which together contributed 21.6% of Hungary's total exports. The foreign content share of exports rose in all industries between 1995 and The three industries with highest foreign value added shares in Hungary's exports in 2011 were,, and, with shares of 74.1%, 66. and 61.7% respectively, compared to 59.4%, 27.9% and 46.3% in 1995, (Figure 3b). Figure 3a. Hungary's industry share of domestic and foreign value content of gross exports percent of total gross exports, 2011 DVA contribution to gross exports, 2011 FVA contribution to gross exports, % 16% 14% 12% 1 8% 6% 4% 2% Figure 3b. Hungary's foreign value added content of gross exports 1995 and 2011 FVA share of gross exports, 2011 FVA share of gross exports,

4 Agriculture Wood & paper Non-metallic minerals Other manufactures Utilities Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Other services Total Of the total value of Hungary's imports of intermediate products and services, nearly three-quarters (70.7%) was subsequently embodied in exports, significantly higher than the OECD average (39.3%) (Figure 4). This was above the equivalent figure in 2009 (66.). The products with the highest shares were ICT & Electronics, and, at 91.1%, 85.1% and 81.7% respectively. Figure 4. Hungary's imported intermediate inputs used for exports, by import category percent of intermediate imports, 2008, 2009, and The destination of domestic value added produced in Hungary Of the total domestic value added produced by the manufacturing sector in Hungary, 80.1% reflected foreign final demand in 2011, higher than the equivalent figure in both 2009 (72.9%) and 2008 (73.3%), (Figure 5), and higher than the OECD average (41.9%) in Figure 5. Manufacturing domestic value added in foreign final demand by country, percent of total manufacturing value added, 2008, 2009, and 2011 (left insert = time series for Hungary) Note: Final demand excludes inventories: See also 3

5 Agriculture Wood & paper Non-metallic minerals Other manufacturing Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Total Manufactures Total At the total economy level, 44.8 % of Hungary's domestic value added was driven by foreign final demand, but significant differences exist across industries. (95.4%) and (92.) had the highest level of export orientation in Hungary, with the lowest shares in Finance & Insurance (30.2%) and Business services (44.2%) (Figure 6). Figure 6. Hungary's domestic value added in foreign final demand, percent of value added by industry, 2008, 2009, and Note: Final demand excludes inventories: See also In gross terms, Germany (21.3%), Italy (6.) and the United Kingdom (6.) were the three most important Hungarian export market destinations. In value-added terms, the top three export destinations were Germany (16.8%), the United States (7.) and Italy (6.) (Figure 7, top). For imports, Hungary's top three partners were Germany (22.8%), Russia (12.8%) and Austria (5.7%), while in value-added terms they were Germany (19.6%), Russia (15.4%) and the United States (5.6%) (Figure 7, bottom). Figure 7. Hungary's exports to and imports from main partner countries percent of total gross and value added exports and imports, Gross exports Domestic value added embodied in foreign final demand ROU 1 1 Gross imports Foreign value added in domestic final demand 4

6 Looking only at exports of intermediates goods and services in value added terms, Hungary's major export destinations in 2011 were Germany (21.7%), Italy (7.1%), Austria (5.) and the United Kingdom (5.), (Figure 8). 1 1 Figure 8. Hungary's domestic value added embodied in intermediate exports to main partner countries percent of total intermediate exports, in value added terms, 2008, 2009, and 2011 ROU The importance of services In 2011 the service content of total exports in Hungary was 51.4%, below the OECD average of 54.3%. Of the total services value added embodied in Hungary's exports nearly half (46.3%) reflected foreign content, significantly above the OECD average (21.8%) (Figure 9). Figure 9. Services content of gross exports by country, gross and value-added terms, percent of total gross exports, Domestic VA content Foreign VA content OECD average SNA service export share Note: SNA services export shares include re-exports in the denominator, and include any actual differences in free on board and basic prices (the distribution margin provided by resident distributors to resident exporters) in goods. 5

7 Agriculture Wood Paper, print, publsh Non-metallic minerals Other manufacturing For exports of manufactured goods alone, 40. of the total value reflected services sector value-added, above the OECD average (36.9%). Of this share, the Business services sector accounted for 14.9% of total gross exports, with the Wholesale, Retail & Hotels and Transport & Telecoms sectors accounting for 13.7% and 5.3%, respectively (Figure 10). Figure 10. Services value added embodied in manufacturing exports, by country, percent of total gross exports, 1995 and Construction Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Other services 1995, Total At the individual sectoral level, the services content of exports was highest in (43.2%), (43.2%) and (42.9%), with shares in all sectors except around the OECD average (Figure 11). Figure 11. Hungary's Services content of gross exports, by exporting industry and service category percent of gross exports by industry 2011 Construction Wholesale, retail & hotels Transport & telecoms Finance & insurance Business services Other services OECD average

8 The origin of domestic consumption In 2011, 35.7% of Hungary's total final domestic consumption reflected foreign content, of which Europe contributed 28.5 percentage points, NAFTA 2.1 pp, East and Southeast Asia 2.3 pp, South and Central America 0.3 pp and other regions 2.6 pp (Figure 12). Figure 12. Foreign value added content of domestic consumption by country by source region, Europe NAFTA East and Southeast Asia South and Central America Other regions Further Information The information included in this note is based on the 2015 edition of the Trade in Value Added (TiVA) database.» Access the data at Please contact us with your questions at tiva.contact@oecd.org 7