By Ben Simmons

Companies are increasingly producing goods and services through supply chains spanning different countries.

Such international fragmentation of production is blurring the concept of country of origin. It also calls into question the interpretation of traditional statistics that measure gross flows of goods and services every time they cross borders. Current indicators do not identify the contribution of each country to the total value of any good or service in the supply chain.

To better understand the dynamics of global supply-chains and the importance of trade to economic growth and employment, the OECD and World Trade Organisation (WTO) have launched a joint initiative to measure trade in the value that is added by a country — through labour compensation, taxes and profits — in the production of any good or service that is exported.

The joint initiative on measuring trade in value-added is explained here. The two organisations will develop a new statistical model leading to the production of a public database of trade flows estimated in value-added terms.