The article deals with the estimation of import intensities of exports, final consumption expenditures and gross fixed capital formation. It uses the input-output methodology of computing direct and indirect imports to the final demand components, which compares with regression estimates. Unlike the widely used turnover approach, the results contribute fundamentally to knowledge about the genuine openness of the Czech economy with regard to how much value-added is exported. In 2015, the highest import intensity for exports amounting to 52%, closely followed by 49% for investments. Household consumption worked with 41% import intensity, while general government consumption expenditures showed the lowest import intensity of 16%. Based on our input-output findings, the true openness of the Czech economy can be revealed. While turnover of exports to GDP reached 80% in 2019, the value-added approach showed only a half, i.e., 40% value-added was exported. It implies a contra-intuitive conclusion that even in a relatively small and highly integrated country into the globalized economy, there is a 60% majority of the non-tradeable goods.
Alcala, F. – Ciccone, A. (2004): Trade and Productivity. Quarterly Journal of Economics, 119(2): 613–646.
Auboin, M. (2018): What is the Import Intensity of Global Aggregate Demand? St. Petersburg University Journal of Economic Studies, 34(1): 59–76.
Baer-Nawrocka, A. – Mrówczyńska-Kamińska, A. (2019): Material and Import Intensity in the Agriculture of the European Union – Input-Output Analysis. Problems of Agricultural Economics, 358(1): 3–21.
Busse, M. – Königer, J. (2012): Trade and Economic Growth: A Re-Examination of the Empirical Evidence. SSRN Electronic Journal, 23/2: 1–24.
Cappariello, R. (2012): Domestic Value-Added Content of Exports: A Cross-Country Comparison for the Major European Economies. Paper Presented at the Final WIOD Conference: Causes and Consequences of Globalization.
Czech National Bank (2020): ARAD – Time Series System. Https://www.cnb.cz/docs/arady/html/Index_en.htm.
Czech Statistical Office (2020): Gross Domestic Product – Time Series. Https://www.Czso.Cz/Csu/Czso/Hdp_Ts.
Dedrick, J. – Kraemer, K. L. – Linden, G. (2010): Who Profits from Innovation in Global Value Chains: A Study of the IPOD and Notebook Pcs. Industrial and Corporate Change, 19(1): 81–116.
Dixit, A. K. – Stiglitz, J. E. (1977): Monopolistic Competition and Optimum Product Diversity. The American Economic Review,67(3): 297–308.
Dreher, A. – Gaston, N. – Martens, P. – Van Boxem, L. (2010): Measuring Globalization – Opening the Black Box. A Critical Analysis of Globalization Indices. Journal of Globalization Studies, 1(1): 166–185.
Eurostat (2020): Purchasing Power Parities. Eurostat Database. https://ec.europa.eu/eurostat/web/purchasing-power-parities/data/database.
Felbermayr, G. – Gröschl, J. (2013): Natural Disasters and the Effect of Trade on Income: A New Panel IV Approach. European Economic Review, 58(2): 18–30.
Francois, J. – Manchin, M. – Tomberger, P. (2014): Explanatory Note: Export of Value-Added Database. The World Bank, 1–39.
Frankel, J. – Romer, D. (2000): Does Trade Cause Growth? American Economic Review, 89(3): 379–399.
Goldar, B. – Kusum, D. – Sengupta, S. – Chandra, P. (2017): Domestic Value Addition and Foreign Content: An Analysis of India’s Exports from 1995 to 2011. ICRIER Working Paper, No. 332.
Gräbner, C. – Heimberger, P. – Kapeller, J. – Springholz, F. (2018): Measuring Economic Openness: A Review of Existing Measures and Empirical Practices. ICAE Working Paper Series, No. 84.
Heckscher, E. F. – Ohlin, B. – Flam, H. – Flanders, M. J. (1991): Heckscher-Ohlin Trade Theory. MIT Press, Cambridge, MA.
Huchet-Bourdon, M. – Le Mouël, C. – Vijil, M. (2017): The Relationship between Trade Openness and Economic Growth: Some New Insights on the Openness Measurement Issue. World Economy, 41(1): 59–76.
Hummels, D. – Ischii, J. – Key-Mu, Y. (2001): The Nature and Growth of Vertical Specialization in World Trade. Journal of International Economics, 54(1): 75–96.
Isard, W. – Langford, T. (1971): Regional Input-Output Study. Cambridge: MIT Press.
Koopman, R. – Zhi, W. – Shang-Jin, W. (2014): Tracing Value-Added and Double Counting in Gross Exports. American Economic Review, 104(2): 459–494.
Krugman, P. (1980): Scale Economies, Product Differentiation, and the Pattern of Trade. The American Economic Review, 70(5): 950–959.
Leontief, W. (1936): Quantitative Input and Output Relations in the Economic System of the United States. The Review of Economic and Statistics, 18: 105–125.
Li, K. – Morck, R. – Yang, F. – Yeung, B. (2004): Firm-Specific Variation and Openness in Emerging Markets. Review of Economics and Statistics, 86(3): 658–669.
Los, B. – Timmer, M. P. – Vries, G. (2016): Tracing Value-Added and Double Counting in Gross Exports: Comment. American Economic Review, 107(7): 1958–1966.
Miller, R. E. – Blair, D. P. (2009): Input-Output Analysis: Foundations and Extensions (2nd ed.). New York, NY: Cambridge University Press.
Miroudot, S. – Lanz, R. – Ragoussis, A. (2009): Trade in Intermediate Goods and Services. OECD Trade Policy Working Paper, No. 93.
Miroudot, S. – Ming, Y. (2018): A Simple and Accurate Method to Calculate Domestic and Foreign Value-Added in Gross Exports. Munich Personal RePEc Archive, No. 89907.
OECD (2019): Guide to OECD’s Trade in Value-Added (TiVA) Indicators. Directorate for Science, Technology and Innovation.
OECD (2020): Trade in Value-Added – TiVA Database. Principal TiVA Indicators .https://stats.oecd.org/Index.aspx?DataSetCode=TIVA_2018_C1.
Potrafke, N. (2015): The Evidence on Globalisation. The World Economy, 38(3): 509–552.
Ricardo, D. ([1817] 1951): On Foreign Trade. In: Sraffa, P. – Dobb, M. H. (eds): The Works and Correspondence of David Ricardo, Vol. 1. Cambridge, UK: Cambridge University Press.
Squalli, J. – Wilson, K. (2011): A New Measure of Trade Openness. The World Economy, 34(10): 1745–1770.
Tang, K. (2011): Correcting the Size Bias in Trade Openness and Globalization Measures. Global Economy Journal, 11(3): 1–24.
Vltavska, K. – Sixta, J. (2017): Input-Output Tables for Regions of the Czech Republic. Statistika: Statistics and Economy Journal, 97(2): 4–14.
Waugh, M. – Ravikumar, B. (2016): Measuring Openness to Trade. Journal of Economic Dynamics and Control, 72(6): 29–41.
Yanikkaya, H. (2003): Trade Openness and Economic Growth: A Cross-Country Empirical Investigation. Journal of Development Economics, 72(1): 57–89.