Page 23 - Special Topic Session (STS) - Volume 2

STS452 Joerg B.
1. Trends in Production
Since decades exports, imports and intermediates are growing more
rapidly in most countries than domestic production (GDP). Exchange of
intermediates in production becomes more and more important. Globalisation
in production is changing the way in which nations interact. The traditional
analysis of diversification is mainly based on the structural change of value
added by industries. The analysis of diversification should also encompass the
worldwide exchange of intermediates in production. An input-output
approach is more appropriate for the analysis of diversification than the
traditional approach with macroeconomic data.
If exports and imports are growing faster than gross domestic product
(GDP), the shares of exports and imports in GDP are also increasing. We
explored UNdata for the 10 largest economies of the world (G10) and 10
ASEAN countries during the last 22 years.
For the G10 during 1995-2017, the increase of the export share in GDP was
5.3 per cent and of the import share in GDP 5.8 percent.
The export share in GDP increased in percent in Germany by 25.0, Japan
8.7, France 8.3, India 7.9, Italy 6.4, Brazil 5.2, United Kingdom 5.1, USA 1.4 and
China 0.6. Decreases were only observed in Canada -5.1. The import share in
GDP increased in percent in Germany by 17.9, France 11.0, India 9.7, Japan 9.0,
Italy 7.1, United Kingdom 6.5, USA 3.2, Brazil 2.1, China 0.5 and Canada 0.04.
During the last 20 years, economic globalization has increased worldwide
interdependencies in production, leading to the more intermediate
consumption of goods and services in the international chain of value added.
If the consumption of intermediate products is growing above its GDP growth
rate, an economy is moving towards more complex participation in inter-
industrial production. We extracted the information on intermediates, value
added and output from the input-output database of OECD (2018).
In 1995–2015, the share of intermediates in total output for the G10
countries increased by 5.9 per cent—in other words, their production
processes became more complex and more interdependent. The share
increased in India in percent by 7.7, China 6.7, Germany 3.4, Brazil 2.0, Japan
1.6, Canada 1.2, France 0.8 and Italy 0.8. At the same time a decline of the
share in percent was observed in United Kingdom -3.6 and USA -2.7.

2. Economic Diversification of ASEAN Countries
Sustainable development of nations involves economic, social and
environmental changes. Within this process, diversification and structural
change of production and demand are closely related to many areas of the
economy and society. For income per capita to converge: Countries must
move towards more diversified, more complex production structures with
more technology and knowledge.

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