ISSUE 2017, No. 4, Article 2, Year of publication: 8, December 2017
The role of multiregional input-output models in the analysis of modern international trade
AUTHORS
Hamid Alibašić, PhD*; Snježana Zarić, MBA**
*PhD Associate Professor, University of East Sarajevo, Faculty of Economics Brčko, Department of Finance and Accountancy**Teaching Assistant, University of East Sarajevo, Faculty of Economics Brčko, Department of Finance and Accountancy
ABSTRACT
ARTICLE INFO
This paper explains the concept of trade in value-added trade, according to which, whenever goods and services are crossed, they are not recorded at their gross value, as required by the traditional approach, but by the newly established value between two crossings. This concept pointed the importance of making, somewhat forgotten, input-output tables as an additional macroeconomic balance, and the harmonization and unification of national into the multiregional input-output table. To this end, the Organization for Economic Co-operation and Development and the World Trade Organization have so far provided the best framework. Therefore, the paper presents an international input-output table methodology developed by the aforementioned organizations, which simultaneously reflects the complex-ity of modern trade relations. The fact that foreign added value accounts for an average of 27% of the countries’ exports, that is, 50% of the trade takes place within the global product chains indicates that such an approach is not only necessary for the calculation of external trade, but also a necessary basis for formulating adequate public policies in each specific country.
Keywords: input-output analysis, external trade, domestic and foreign added value.