TRADE IN VALUE ADDED: NEW ZEALAND

Transcription

1 TRADE IN VALUE ADDED: NEW ZEALAND 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 New Zealand 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 While the foreign content of New Zealand's exports increased to 16.6% in 2011 from 15.2% in 2009, it remains lower than the pre-crisis recent high of 18.6% in 2008 and marginally below the rate in 1995, suggesting that New Zealand s integration in global value chains (GVCs) is still recovering from the crisis. This is relatively low compared to similar sized economies but partly reflects geography and a relatively high specialisation in products with typically high domestic value-added content, including agriculture and food products. Over 4 of the value of manufacturing exports reflected services content in 2011 and 57.4% for the total economy.

2 The role of foreign and domestic value added in exports While the foreign content of New Zealand's exports increased to 16.6% in 2011 from 15.2% in 2009, it remains lower than the pre-crisis recent high of 18.6% in 2008 and marginally below the rate in 1995 (Figure 1). Figure 1. Foreign value added content of gross exports by country percent, 2008, 2009, and 2011 (right insert = time series for New Zealand) Of New Zealand's total exports of domestic value-added in 2011, nearly half (49.) reflected exports of intermediates, slightly above the equivalent share 49.3% in 2009 and 1995 (48.9%), (Figure 2). New Zealand's total exports of domestic value added share in intermediates in 2011 was below the OECD average of 61., partly reflecting geography and a relatively high specialisation in products with typically high domestic value-added content, including agriculture and food products. 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 generated the greatest source (both direct and upstream) of domestic value added in 2011, accounting for 21.2% of the total value added of exports. The next three most important industries were the Wholesale, retail & hotels (13.3%, partly reflecting tourism and upstream distribution services to exporters), Transport & telecoms (11.9%), and Agriculture (10.1%) industries (Figure 3a). The large foreign contributions were in the and the Wholesale, retail & hotels industries, which together contributed 7.3% to New Zealand's total exports. The three industries with the highest foreign value added shares in New Zealand's exports in 2011 were (35.), (32.8%), and (32.2%), compared to 30.8%, 22.8% and 26. in 1995 (Figure 3b). Figure 3a. New Zealand'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, Figure 3b. New Zealand'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 New Zealand's imports of intermediate products and services, 32.8% was subsequently embodied in exports, below the OECD average (39.3%) but above the share in 2009 (31.3%) (Figure 4). The products with the highest shares were Agriculture (47.7%), (46.2%) and Transport & telecoms (40.2%). Figure 4. New Zealand'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 New Zealand Of the total domestic value added produced by the manufacturing sector in New Zealand, 44.2% reflected foreign final demand in 2011, higher than in 2009 (41.2%) but lower than in 2008 (44.7%) and above the OECD average (41.9%) in 2011 (Figure 5). 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 New Zealand) 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, 26.1 % of New Zealand's domestic value added was driven by foreign final demand, with significant differences across industries. (75.7%,) and (70.9%) had the highest level of export orientation in New Zealand, with the lowest shares in Non-metallic minerals (14.9%) and Business services (15.8%) (Figure 6). Figure 6. New Zealand'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, Australia (26.2%), China (10.8%) and the United States (9.9%) were the three most important New Zealand export market destinations. While in value-added terms, the United States (11.8%) displaced China (10.) in second place (Figure 7, top). For imports in gross terms, New Zealand's top three partners were Australia (19.2%), China (10.9%) and the United States (10.), while in value-added terms the United States (11.6%) again displaced China (9.9%) in second place (Figure 7, bottom). Figure 7. New Zealand'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 SAU 1 1 Gross imports Foreign value added in domestic final demand SGP SAU MYS 4

6 Considering only exports of intermediates goods and services, New Zealand's major export destinations in 2011 were: Australia (27.6%), China (12.8%), Japan (6.7%), and the United States (6.3%) (Figure 8). Figure 8. New Zealand's domestic value added embodied in intermediate exports to main partner countries percent of total intermediate exports, in value added terms, 2008, 2009, and SGP MYS THA The importance of services In 2011 the services content of total exports in New Zealand was 57.4%, above the OECD average of 54.3% (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 Wholesale, retail & hotels sector accounted for 13.6% of total gross exports, with the Business services and Transport & telecoms industries accounting for 11.2% and 7. 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 sectoral level, the services content of exports was close to the OECD average in nearly all industries and was highest in (47.9%), (42.6%) and (41.) (Figure 11). Figure 11. New Zealand'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, 20.4% of New Zealand's total final domestic consumption reflected foreign content, of which Europe contributed 4.8 percentage points (pp), NAFTA 2.7 pp, East and Southeast Asia 5.6 pp, South and Central America 0.4 pp and other regions 6.9 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