86232 MARCH 2014 • Number 137 Global Value Chains in the Current Trade Slowdown Michael J. Ferrantino and Daria Taglioni Real growth in global trade has decelerated significantly since its sharp recovery in 2010. Year-on-year growth in global real trade1 decelerated from 13.3 percent at the end of the first quarter of 2010, to 9.9, 3.1, and 0.5 percent at the end of the first quarters of 2011, 2012, and 2013, respectively, while picking back up to 3.9 percent in the year leading up to the fourth quarter of 2013.2 This aggregate deceleration in global trade includes absolute declines in real trade for many product categories and regions. In the wake of the Great Trade Collapse of 2008–9, understanding of the behavior of trade in slowdowns has improved. Among the many explanations offered for the Great Trade Collapse, including explanations related to uncertainty, trade financing, and new protectionist measures by governments, there has been a significant focus on whether the emergence of global value chains (GVCs) in international trade, and their behavior, are a contributing factor in trade slowdowns.3 Relationship between GVCs and Trade thus the same drop in demand for the final good causes two Decelerations trade flows to disappear. This simple argument turns out to be fallacious (O’Rourke 2009): since there is twice as much GVCs involve trade in goods that have multiple production trade in a GVC world, then a 1 percent drop in demand leads stages that take place in many different countries (that is, to a 1 percent drop in both intermediates and final trade, “production fragmentation” or “slicing up the value chain”) which is not unusual. and in which multiple imports and exports of intermediate However, global trade, in fact, consists of both GVC goods are necessary to produce a final good, which may also be trade, say, complex goods such as automobiles, whose parts exported. Since the emergence of the North American GVC and components are produced in different countries and then in automobiles in the 1960s and the East Asian electronics assembled in one location, and non-GVC trade, such as ex- GVC in the 1970s, the role of GVCs in international trade ports of bananas that require no further processing. If there is has become more important and has attracted increasing at- a drop in global demand, and demand for complex goods such tention. There are several potential reasons why GVC trade as automobiles drops more rapidly than demand for simple may behave differently. goods like bananas, then a compositional effect of decelerating First, there is a crude statistical argument for a relation- demand for goods produced in GVCs (for example, complex ship between GVC trade and slowdowns, arising from the consumer goods and capital goods) could cause trade to slow fact that there are more trade flows in GVC trade than in non- down more rapidly than it would otherwise. Since the world GVC trade. If an exported good is produced entirely within has gradually transitioned over the last several decades to a the exporting country, and there is a reduction in demand, world in which GVC trade has become more important, there then one trade flow disappears. But if the exported good is appears to have been a long-run increase in the elasticity of produced with an imported input, there are two trade flows global trade with respect to global income (Escaith, Linden- (the import of the input and the export of the final good), and 1 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise berg, and Miroudot 2010). This increase in elasticity reversed Within these patterns, there is substantial regional and itself in the late 2000s. Whether this reversal is due to cyclical sectoral variation. While the above generalizations are useful, factors associated with the recent financial crisis, or to the not every GVC produces a good whose final demand is un- possibility that the structural transformation associated with usually sensitive to declining income, and not every GVC ex- the increasing geographical fragmentation of production is hibits bullwhip behavior at all times. For example, GVCs in now nearly finished, is not yet known. In any case, the fact more sophisticated value chains, especially those associated that demand for the final good is ultimately spread out over with large multinational lead firms making extensive use of demand for intermediates in many countries means that the high-tech supply chain management tools, may be more adept transmission of demand shocks during a slowdown in any one at managing fluctuations in demand. region may be more rapid and greater in a world where GVCs are important. Three Representative GVCs: Apparel/ In addition, different parts of a GVC may behave differ- Footwear, Electronics, and Motor Vehicles ently in a downturn. In particular, reductions in final de- and Related Parts mand may lead to even larger reductions in intermediate A focus on trade in three important product groups charac- demand, so that trade in intermediates declines more rapid- terized by GVC-type trade—apparel and footwear, electronics, ly than trade in final goods, the so-called bullwhip effect (Alto- and motor vehicles and parts—provides a simple picture of the monte et al. 2012; Zavacka 2012). When demand for final role of GVCs in the current trade slowdown. The goods mak- goods slows, exporters of such goods can continue for a ing up these GVCs, defined in Sturgeon and Memedovic while on inventory rather than ordering new intermediate (2011), can be divided into intermediate goods and final goods for production, so intermediate goods trade declines goods using BECs (Broad Economic Categories). Together, more rapidly than final goods trade. On top of this, the effect these goods make up about 20 percent of global trade. How- of uncertainty is different in the upstream parts of the supply ever, the GVCs for these goods include more trade than is in- chain, especially for firms that are more peripheral in terms cluded in the definitions. A significant amount of primary of decision making. Having less information about the drop trade—in metals, chemicals, fossil fuels, electric power, and in demand for final goods, the suppliers of inputs may start natural fibers produced in agriculture—is involved in provid- avoiding risk, cutting production and trade in intermediate ing inputs for the goods in this analysis. Moreover, GVCs exist goods even more rapidly than if they had the same informa- for other complex goods, such as capital equipment, precision tion as final-goods producers. instruments, and chemical-based consumer goods such as cosmetics and personal care products. It is possible that the Figure 1. Trade in GVCs Has Decelerated More Rapidly Than Total Trade three GVCs analyzed here have had be- 40 havior similar to other GVCs, but the extent is uncertain. 30 Overall GVC Trade in Current Slowdown growth for period ending at date shown (%) 20 Figure 1 shows that in the current slow- down, trade in the three GVCs com- year-on-year real growth bined has declined more rapidly than 10 global trade.4 In the Great Trade Col- lapse, the deceleration was also more 0 rapid. However, during 2008–9, GVC trade collapsed more rapidly than glob- 20 Q1 20 2 20 3 20 4 20 Q1 20 2 20 Q3 20 Q4 20 1 20 Q2 20 3 20 Q4 20 Q1 20 2 20 Q3 20 4 20 Q1 20 2 20 Q3 20 Q4 Q1 Q Q Q Q Q Q Q Q Q 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 20 -10 al trade, and then boomed back. The current slowdown in GVC trade, rela- All goods, average tive to total trade, is more subtle. Argu- -20 GVC, all ably, GVC and non-GVC trade have grown at about the same rate since late -30 2011. However, in four of the last five rolling 12-month windows calculated on quarterly data, GVC trade has grown -40 less rapidly than total trade. In the most Source: Datastream, International Trade Commission (ITC), World Bank. 2 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise Figure 2. Trade in Motor Vehicles and Parts Has Led Decline in Current and Sectoral patterns Previous Slowdowns At the sectoral level, a decline in demand 40 for motor vehicles and parts is leading the current slowdown, as it did during 30 2008–9. The bust-and-boom behavior of growth for period ending at date shown (%) trade in motor vehicles and parts has been 20 associated with the domestic stimulus programs in this sector pursued by many year-on-year real growth 10 countries in the aftermath of the 2008–9 recession. In turn, the phasing out of these programs may be contributing to 0 the disproportionate slowdown in motor 20 Q1 20 2 20 Q3 20 4 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 4 20 Q1 20 2 20 Q3 20 Q4 Q1 Q Q Q Q vehicle trade. 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 20 -10 Regional patterns in GVCs apparel/footwear GVCs often operate on a regional basis to -20 electronics optimize time and transport costs. To ex- autos and parts amine the different patterns, GVC trade -30 can be divided into three regional supply chains: EU27+, which includes the 27 -40 members of the European Union (EU27)5 as well as their GVC partners in Morocco, -50 Tunisia, and Turkey; North American Source: ITC, World Bank. Free Trade Agreement (NAFTA) coun- tries (Canada, Mexico, and the United Figure 3. The Europe-Centered GVC Contracted First, Then NAFTA and East Asia States); and East Asia (including Japan, 60 China, the Republic of Korea, and other large Asian traders). Each of the regions 50 includes both developed and developing EU27+ as importer countries. Remaining trade is classified as growth for period ending at date shown (%) 40 East Asia as importer “rest of the world.” For the three sectors NAFTA as importer analyzed here, over 96 percent of their 30 ROW as importer trade involves one of the three big regional year-on-year real growth GVCs, either as an exporter or importer. 20 On a regional basis, the slowdown in EU27 demand is most notable. EU27 im- 10 ports of GVC goods (including intrare- gional imports) did not recover as dramat- 0 ically as imports of other regions, and 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 Q1 have been in absolute decline in real 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 -10 20 terms since 2011. In the most recent -20 12-month window ending in the first quarter of 2013, real growth in NAFTA -30 and East Asian GVCs is also negative, while GVC imports by the rest of the -40 world have been more resilient (figure 3). Source: ITC, World Bank. Differences between intermedate and Note: EU27+ = EU 27 and Morocco, Tunisia, and Turkey; NAFTA = North American Free Trade Agreement; ROW = rest of world. final goods trade Figure 4 shows one difference between recent window for which data are available, that ending in the the current trade slowdown and the Great Trade Collapse. first quarter of 2013, total global merchandise trade increased Looking at the three sectors together, the strong bullwhip be- by 2.0 percent, while GVC trade declined by 0.6 percent. havior (intermediate trade declining more than final goods 3 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise Figure 4. Within GVCs, Trade in Intermediate Goods Has Slowed More recent years, the most notable slowdown in Rapidly Than Trade in Final Goods demand has been in Europe. While world 50 economic activity grew by 4 percent in 2011 and 3.2 percent in 2012, with projections 40 for 2013 at 3.3 percent, in the EU-27, it world world GVC, intermediate only grew by 1.6 percent in 2011, and con- 30 world world GVC, final tracted by 0.2 percent in 2012. The euro growth for period ending at date shown (%) area seems to have been driving the EU per- 20 formance, with 1.4 percent growth in 2011 and 0.6 percent contraction in 2012, and a year-on-year real growth 10 further contraction for 2013 estimated at 0.3 percent.6 0 The slowdown in Europe is having sig- nificant spillover impacts on its trading part- 2008M1 2008M5 2008M9 2009M1 2009M5 2009M9 2010M1 2010M5 2010M9 2011M1 2011M5 2011M9 2012M1 2012M5 2012M9 2013M1 ners in Africa and the Middle East. This -10 point is highlighted by the network repre- sentation of world trade (using a Minimal -20 Spanning Tree [MST]) shown in figure 5, which details overall bilateral trade for -30 2010. MSTs enable at-a-glance visualization of large and dense networks, such as world -40 trade. The lines in the network represent link weights and are proportional to trade -50 flows, while the size of the nodes reflects a Source: ITC, World Bank. country’s degree of centrality in global trade. Following the links of the network, it trade) that characterized 2008–9 does not appear in aggre- is possible to assess which countries’ exports are most likely to gate GVC trade in the latest slowdown. Trade in intermediate be affected by a contraction of activity and demand in the Eu- and final GVC goods are currently decelerating at a propor- ropean Union. tional rate. World trade appears polarized around three main blocks. Given the hypothesized origin of bullwhip behavior in China, of course, is the most relevant trade partner for many the management of uncertainty and inventories, there are countries (higher degree of centrality), but so are the United some potential explanations for this difference. It could be States and Germany. More specifically concerning the Euro- that firms in GVCs have learned from 2008–9 and are able to pean Union, it appears that there are three distinct sub-blocks. adjust production in the supply chain more efficiently and One is centered around Germany and comprises mostly better anticipate the slowdown. Also, because the current countries from the wider European region. The second is cen- slowdown is more modest, there is less uncertainty in the sys- tered around France and comprises a mix of Middle Eastern, tem overall for firms to react to, thus less bullwhip behavior. African, and European countries. The third sub-block centers However, breaking down the behavior of final versus in- on Italy and comprises Mediterranean and North African termediate trade by sector and region, it appears that bull- partners. whip behavior is not entirely extinct. Over the last two years, The same representations can be carried out for indi- declines in intermediates trade in excess of final goods trade vidual industries. Figures 6–8 provide MSTs of the three characterized the electronics GVC for most of 2011 and GVCs industries discussed here: electronics, motor vehicles 2012, but have recently moderated. Intra-EU trade in GVCs (including motorbikes), and apparel (including footwear). as a whole has exhibited bullwhip behavior. For the year end- For the electronics industry, the clustering broadly follows ing in the first quarter of 2013, real intra-EU GVC trade in the main regional blocks. The network centered around EU final goods increased by 1.3 percent, while intra-EU GVC countries comprises mostly European, Middle Eastern, and trade in intermediates decreased by 5.4 percent. North African countries. The European trade network links back to the rest of the world through the United States. Mo- GVCs’ Impact on EU Slowdown tor vehicle trade is also very regional in scope, but the num- Trade is likely to slow down most rapidly in countries export- ber of countries clustered around Europe is higher than in ing to regions where demand has slowed down the most. In the case of electronics, for which Asian countries are most 4 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise Figure 5. World Trade Network, 2010 Figure 7. World Trade Network, 2010: Passenger Vehicles LBN NFK SEN JOR BDI CCK QAT BVT NIU PAK KIR IRQ MWI ARE WLF TGO BOL SDN ZWE MOZ GNB GHA NGA PNG AFG PRY LKA GMB AFG GHA LKA NER URY NZL ARG COM NCL GRD ERI ZMB NPL EGY FLK SGS AND MLI GIN PRT NRU BDI LVA UZB MDA BTN GRL PCN WSM TON IND EST UKR NFK ZAF IRL SUR CCK FJI LTU BRA BIH TZA ARM IND GBR KEN BGR ESP LAO ISL FIN DJI MNP POL AUS URY BLR LVA ETH UMI MUS KGZ RUS PNG WLF ALB CZE SVK SVN AZE NOR MYS NZL SLB ASM FJI VCT MDA LTU THA TKL EST ZWE ZAR TJK CHL BMU CXR HMD RWA ITA ROM ATF DMA BFA DNK PRT TZA CUB IDN NRU YUG FIN BTN SWE BFA PRK COG MNG MRT BLX CUB CPV WSM NLD DEU BHR ZAR KOR AUS HRV AUT MNP CPV NPL SAU UGA IRQ TON GNQ SPM GRC GIN GIB CAF GMB CHE TKM GNB BEN MDG TUN OMN AIA CYP HTI BLZ VUT ESP KOR PRY TCD KHM PAK MOZ PLW CAF MKD TTO SEN KEN ETH TCD TUN ASM FRA TUR BMU CHN BGD SYC NCL IRL RWA BRN CHN VNM KIR ARM PHL JPN ESH FSM DZA VGB JPN GAB MAR ZAF MHL DJI GNQ BRN PRK PLW IRN MAR SGS PYF MRT MLT CMR NER CIV CYM MYS BOL LBN KAZ GIB MLT KGZ YEM VCT FRA GBR YEM PHL THA CYM ZMB VNM TUV COM SDN IRN LAO SOM CHE HUN STP SGP MUS SGP BEN TUV MMR LBR GUM CMR BGR HUN AGO TGO ARE MWI MDG MKD SAU JOR TKM SYR PYF SVK DEU BHR GEO UGA MDV NOR IDN SWE OMN SLB GEO SOM MLI TUR QAT AUT AZE TMP PER SVN YUG UKR COK NLD BLX KWT CZE ISL POL TJK ROM ATF STP DNK SLE GUM BRB COK LBY LBY LBR VUT JAM ITA FSM RUS CRI USA SYR GRL LCA BLR CAN DOM SLV MHL ECU CXR HRV BLZ GUY ATG KNA BHS HND ERI PCN UZB MNG TCA ANT SLV AGO SHN FLK ALB DZA USA TCA KAZ MMR LCA SLE IOT GTM BIH GRC CAN HTI DOM NIC VEN MEX SUR BGD KWT BRA ISR IOT SPM EGY NIC PAN COL ISR GRD CHL COG CRI TTO MSR CYP AIA GAB KHM TKL DMA ABW VGB KNA PER PAN GUY ARG ECU HMD ANT GTM VEN UMI JAM SYC MEX HND COL SHN ESH MSR BHS NGA MDV ABW Source: Comtrade. NIU AND BVT CIV TMP BRB Figure 8. World Trade Network, 2010: Apparel and Footwear ATG Source: Comtrade. MRT MWI ARE MLT FLK TCD Figure 6. World Trade Network, 2010: Electronics MMR AND SGS ISL GBR DZA VGB IRL CYP COM GEO TJK HMD ASM BLZ BDI NER ESH TGO DJI LAO GRC CHE TON OMN LTU KHM BTN KGZ TUR UMI POL ATF TUV PAK NZL JAM NPL KEN NLD KNA VEN LBN BLX DEU HUN SWE WSM BGR PER NFK IND AUT DNK ETH TZA PCN MKD ROM ARM MDG AZE SVK BLR BGD CXR GRL CZE NOR MNP HRV PAN ERI TKM SVN MHL RUS LKA BTN AUS ZAR EGY AIA BVT TUN FRA BGD COK GHA AFG VEN PHL NRU SAU CIV BRB IND TMP MSR PYF IRN TZA MYS YEM SDN ITA BMU SYR GNQ ALB FIN LAO BOL URY SLE GAB ERI BRA IRQ IRQ VCT JPN LBR MDA ARG PAK UKR YUG PER ABW EST KOR PCN LKA LCA CHL KOR PYF MUS PLW BIH ESP CUB AGO COK ATG NIU DMA VNM SOM FJI ANT CHN IOT LVA IRN ATG PAN VUT PRK SUR RWA PRT QAT GIB MYS DZA TTO UZB FSM CIV CPV WLF PRK ZMB HTI BFA KIR BRB NZL ZAR DOM COL GIN MAR STP NFK CCK ARE GUY SLB ZMB LBY CUB WSM ECU PRY MLI BHS MMR OMN KWT SAU NCL COG SPM SDN MHL KAZ SEN SUR MUS UGA CXR AUS BHR IDN THA MDV TKM GNB SOM CAN SGP CHN UGA BEN MOZ MNG TCD GMB SYC KEN YEM DOM WLF ARG ISR BFA VGB KWT GHA PNG GRL TUV NIC USA BRA LBY MWI URY SGP ETH GUM IOT CHL AIA BEN DJI CRIGRD MEX LBR HND TCA CCK CMR GIN QAT AGO KHM CYM SHN BHR USA ASM BRN TCA FLK VUT ZAF TKL SLV PLW HMD GUYDMA GRD NCL AFG ZWE CAN GTM TGO KIR MEX ISR SYC SLV JAM NIC PNG ECU COL NGA ZWE SPM MNP VNM LCA FSM CRI JOR BRN NRU JOR NIU MNG GTM SEN MDG TON TTO JPN UZB SLB KAZ THA MDV IDN TMP CAF BIH VCT HND GEO ISL ANT LBN ABW PHL FIN POL PRY MRT ARM MDA CYP GMB TUR AND CMR ESH Source: Comtrade. TJK CAF KNA BOL HUN HRV SVN HTI NPL MSR YUG BDI CPV LTU GIB BMU GNB DEU FRA FJI SVK PRT RWA ITA CHE ESP BHS GAB BGR TUN MAR BLZ LVA DNK EGY STP CYM AUT NGA SGS SYR ROM COG ZAF NLD RUS GNQ GRC COM BLX BVT even taking traditional determinants of trade into account, NER CZE TKL MLI KGZ MKD ATF SWE UMI GBR UKR ALB BLR exports to markets experiencing stock market volatility de- NOR SHN GUM EST MLT SLE IRL AZE MOZ cline by more than expected (Taglioni and Zavacka 2012). Source: Comtrade. The deterioration of financing conditions in the Europe- an Union also pose a problem. Inadequate financing con- central to the network. The most central EU country for mo- strains working capital, which affects firms’ investment deci- tor vehicles is Germany. Finally for apparel, Italy, France, and sions and limits funds, particularly for small and medium Spain represent more central nodes in the global network. enterprises, which are the backbone of the EU economy. The Dampened demand, which has concentrated in these coun- prolonged financial crisis in the European Union likely has tries, may explain the subdued growth of apparel GVCs had a significantly negative impact on firms, which in turn has shown in figure 2. affected the exports of their foreign suppliers. Ongoing financial market friction in the European Conclusion Union, particularly in the euro area, have also greatly in- creased uncertainty, leading to delays on investment and ex- The recent slowdown in global merchandise (2010-early penditure decisions, especially regarding durable goods. In- 2013) confirms some of the lessons learned during the Great creases in uncertainty can have a dampening effect on trade, Recession. Trade in complex products organized in GVCs has as producers scale back investment decisions and inventory once again been more sensitive to global downturns than has accumulation (as discussed above under the bullwhip effect) trade in simple products, particularly for motor vehicles. For and consumers postpone purchases. Evidence shows that, motor vehicles, the start-and-stop nature of incentives in 5 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise many countries may have added to the volatility. Conversely, sector-specific import price deflators for the United States, trade in simpler products appears once again to be more resil- taken as a rough proxy for the global market. ient to global downturns. Although evidence is still accumu- 5. In June 2013, Croatia joined the European Union, becom- lating, this suggests that the preference often expressed for ing the 28th member. However, since this analysis covers the countries to go “up the value chain” by specializing in more period up to mid-2013, the analysis includes only the EU-27. and more complex products may need to be qualified. While 6. See the International Monetary Fund’s World Economic diversification is one way to manage risk associated with ex- Outlook (April 2013, http://www.imf.org/external/pubs/ft/ port portfolios, focusing on simpler products less associated weo/2013/01/). with GVCs may be another way, and there is likely to be a References tradeoff between these two strategies. Continued monitoring and research in this area is warranted. Altomonte, Carlo, Filippo Di Mauro, Gianmarco Ottaviano, Armando Rungi, and Vincent Vicard. 2012. “Global Value Acknowledgments Chains During the Great Trade Collapse: A Bullwhip Effect?” European Central Bank Working Paper Series No. 1412. The authors would like to thank Gianluca Santoni for the Baldwin, Richard, ed. 2009. The Great Trade Collapse: Causes, Con- analysis of networks and accompanying charts, and Guiller- sequences and Prospects. London: Center for Economic Policy mo Arenas and Amir Fouad for additional research assistance. Research and VoxEU.org. Escaith, Hubert, Nannette Lindenberg, and Sébastien Miroudot. About the Authors 2010. “International Supply Chains and Trade Elasticity in Michael J. Ferrantino and Daria Taglioni are Lead Economist Times of Global Crisis.” Economic Research and Statistics Division Staff Working Paper ERSD No. 2010-08, World Trade and Senior Economist, respectively, in the World Bank's Interna- Organization, Geneva. tional Trade Unit. O’Rourke, Kevin. 2009. “Collapsing Trade in a Barbie World.” Notes http://www.irisheconomy.ie/index.php/2009/06/18/collapsing- trade-in-a-barbie-world/. 1. Unless otherwise specified, the trade data used in this note Sturgeon, Timothy J., and Olga Memedovic. 2011. “Mapping represent the average of import and export data to smooth Global Value Chains: Intermediate Goods Trade and Structural out the effect of short-run discrepancies in the two series. Change in the World Economy.” United Nations Industrial 2. World Bank’s Datastream, maintained by DEC. Development Organization, Development Policy and Strategic Research Branch Working Paper 05/2010, Vienna. 3. Baldwin (2009) reviews the explanations for the Great Taglioni, Daria, and Veronika Zavacka. 2012. “Innocent Bystanders: Trade Collapse offered by economists in mid-2009, including How Foreign Uncertainty Shocks Harm Exporters.” World Bank the role of GVCs. Policy Research Working Paper No. WPS 6226, Washington, DC. 4. Due to lagged reporting of monthly figures at the product Zavacka, Veronika. 2012. “The Bullwhip Effect and the Great Trade level, data for this analysis are only available through the first Collapse.” European Bank for Reconstruction and Develop- quarter of 2013. Nominal GVC trade has been deflated using ment Working Paper No. 148. The Economic Premise note series is intended to summarize good practices and key policy findings on topics related to economic policy. They are produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank. The notes are available at: www.worldbank.org/economicpremise. 6 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK    www.worldbank.org/economicpremise