Accounting Frameworks for Global Value Chains: Extended Supply-Use Tables
The increasing fragmentation of production in recent decades has challenged conventional wisdom on interpreting globalization. Traditional measures of trade, for example, record gross flows of goods and services each time they cross borders, leading to potential “multiple” counting of trade. The international statistics community has begun to develop new measures of trade on a value added basis, but, except for recent exploratory initiatives, they are silent on some aspects of globalization, like the role of multinationals. Multinationals can shift intellectual property products from one economic territory to another, which raises questions about the ability of GDP, and by extension other macroeconomic statistics, to accurately describe “meaningful” economic activity. There is a growing appreciation that the statistical compilation tools and accounting frameworks developed in various manifestations of the System of National Accounts may reflect a world that no longer exists. Arguably an approach that reflects a better articulation of globalization in the core accounting framework may be needed. Extended Supply Use tables provide a basis for bringing together various domains into a single integrated economic accounting framework.