Supply chain added value measuring

Supply chain added value measuring

For a long time many economists and companies along the textile net worth chain would have wished to measure the added value in textile trade at each stage and based on an international measuring model. Now such a model is on the horizon globally and initiated jointly by OECD Organisation of Economic Cooperation and Development and WTO World Trade Organisation, of course for all trading and not specifically for textiles

The explanation for the desire to define value added is based on the fact that the world is becoming increasingly interconnected and goods and services are no longer entirely produced in a single country as we all well know from the textile relevant sectors. The global production chain is driven by technological progress, cost, access to resources and markets and trade policy reforms. With the fragmentation of production the traditional measuring of trade by recording the gross flows every time they cross borders is becoming a bit obsolete and is missing accuracy. The new initiate will develop a model to measure flows related to the value that is added such a labour compensation, taxes and profits by a country in the production of goods and services exported. If this model prevails it will actually design exactly the beneficiaries of the value added at each stage.

The new model will help to better analyse trade, economic growth and employment and to identify global imbalances and to better evaluate trade disputes. It should help also to prevent in the future macro-economic shocks as they occurred in 2008-09 and it certainly will create a new understanding of trade and also of the textile value chain.

www.oecd.org

www.wto.org


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