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Metal intensity of use in the era of global value chains

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Abstract

The growing importance and complexity of global value chains distances consumption of metals embodied in final goods from the time and location of initial ore mining, processing, and trade. Fragmentation of global production complicates the analysis of metal intensity of use and requires novel approaches and types of data used. In this study, we use the trade in value-added (TiVA) database as it allows for the measurement of value added of a particular industry embodied in final demand, while accounting for contributions of domestic and foreign suppliers of intermediate goods. Recent studies show that these value-added consumption data reduce double counting that characterizes conventional gross data. Using the panel data on 63 countries over 1995–2011, we find that economic structure explains variations in metal intensity of use which we define as a ratio of value added of metals consumed to the aggregate value added. Given the declining shares of manufacturing and increasing shares of services in both advanced and developing economies, we may expect global metal intensity of use to decrease in the long run. However, metal intensity of use may receive some boosts due to expansionary stages of the business cycle and increased investment. In addition, those metals that are used in high technology applications may experience increasing intensity of use.

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Notes

  1. Johnson and Noguera (2012) find that trade in intermediate inputs accounts for as much as two-thirds of international trade.

  2. This is similar to the calculation of labor value added of exports calculations performed by Cali et al. (2016).

  3. This sector is commonly regarded as a source of economy-wide productivity gains: “The electrical machinery and optical equipment sector is an important and strategic part of Europe’s manufacturing sector, producing a wide range of mostly high-technology products (for example, computers, switchgears or semi-conductors). This sector has been cited as being at the centre of industrial development, as almost every other sector depends, at least to some degree, on the capital equipment, technology, end-products, research and innovations that are provided by the electrical machinery and optical equipment sector.” (Eurostat 2009, p. 258; Eurostat 2012)

  4. See Hellmer and Ekstrand (2012) regarding China’s role in the world’s iron ore market and Tercero Espinoza and Soulier (2016) regarding China’s role in world copper markets

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Authors and Affiliations

  1. Academy of Public Administration of Kazakhstan, 33a Abay Avenue, Astana, Kazakhstan, 010000

    Zauresh Atakhanova

  2. Graduate School of Public Policy, Nazarbayev University, 53 Kabanbay Batyr Avenue, Block C3, Astana, Kazakhstan, 010000

    Peter Howie

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  1. Zauresh Atakhanova
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  2. Peter Howie
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Correspondence to Peter Howie.

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Foreword

This study is respectfully dedicated to John Tilton.

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List of countries in TiVA database and their metal intensity of use

List of countries in TiVA database and their metal intensity of use

Table 8 VA intensity of use, 1995–2011 average
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Atakhanova, Z., Howie, P. Metal intensity of use in the era of global value chains. Miner Econ 33, 101–113 (2020). https://doi.org/10.1007/s13563-019-00176-5

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