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The Joint Research Centre (JRC) is the European Commission's science and knowledge service which employs scientists to carry out research in order to provide independent scientific advice and support to EU policy.
The increase in the fragmentation of production across countries and the subsequent growth in the trade of intermediate products have raised concerns about the suitability of conventional trade statistics to understand the economic consequences of trade. Several authors have attempted to disentangle value added content of trade. This technical report proposes a novel framework that enables to: (1) fully decompose the factor content of bilateral trade measured at the border; and (2) account for the role of the different countries and industries participating in the global vale chain. Furthermore, because of the country and industry detail of this approach, it able to provide a new extension of the standard value added to exports ratio, and also reconcile the “sink-based” and “source-based” methods commonly used to report the value added in trade.