US and Europe more vital for Australian trade than thought
Australian goods exported to western markets indirectly via East Asia, skewing statistics
The US and Europe account for a larger share of Australian exports than implied by conventional trade statistics "as some Australian content is exported to those locations indirectly via east Asia", according to a Reserve Bank of Australia working paper.
International Trade Costs, Global Supply Chains and Value-added Trade in Australia, by Gerard Kelly and Gianni La Cava, examines how the structure of production and trade in the country has been affected by the expansion of global networks.
Using "complementary" estimates of value-added trade – "as conventional measures of international trade do not fully capture the impact of global supply chains" – the paper finds that Australian production now involves more stages of production than it did three decades ago.
"A greater share of production occurs overseas, and more production occurs towards the start of the supply chain," according to Kelly and La Cava, who conclude these structural adjustments occurred mainly in the 1990s.
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