TRADE IN VALUE ADDED: UNITED KINGDOM
The international fragmentation of production in global value chains (GVCs) challenges the way we look at
the global economy. Today, “what you do” - the activities a firm or country is involved in - matters more
for growth and employment than “what you sell” - the products that make up final sales or exports.
Understanding how GVCs work and how they affect economic performance is essential, as is determining
which policies help derive the greatest benefits, and reduce the risks. The OECD-WTO Trade in Value
Added (TiVA) database facilitates analysis of GVCs by measuring trade in value-added terms to generate
new insights about the commercial relations among economies and the process of value creation. Drawing
on the third version of the TiVA database, this note describes the United Kingdom’s trade patterns in valueadded terms, with a view to informing policy debates in a range of areas, including trade, innovation, and
investment.
Accompanying this note is a User Guide designed to assist interpretation and provide context to the
indicators presented: http://www.oecd.org/sti/ind/TiVA_2015_Guide_to_Country_Notes.pdf
Key findings

The foreign content of UK exports rebounded to 22.9% in 2011 from the crisis low of 18.8% in
2009, the UK’s highest rate for which TiVA data are available.

The export orientation of UK manufacturers also reached a new high in 2011, with over half
(52.5%) of manufacturing domestic value added driven by foreign final demand. Around threequarters of the value-added in the Basic metals (78.9 %) and ICT & electronics (73.8%) industries
was exported in 2011.

Direct exports of business services generated the greatest source (both direct and upstream) of
domestic value added in 2011, accounting for 13.9% of the total value added of exports, with
finance & insurance coming in second at 11.1%,

Nearly two-thirds (63.5%) of value added exports reflected services content in 2011

Significant imports of Basic metals (60.6%), Machinery parts (48.8%) and Motor vehicle parts
(45.6%) were used in exports.
The role of foreign and domestic value added in exports
The foreign content of UK exports rebounded to 22.9% in 2011 from the crisis low of 18.8% in 2009, the
UK’s highest rate for which TiVA data are available.
Figure 1. Foreign value added content of gross exports by country
percent, 2008, 2009, and 2011 (right insert = time series for United Kingdom)
2011
2009
2008
70%
1995
40%
2008
2009
2010
2011
50%
2005
60%
2000
25%
20%
15%
10%
5%
0%
30%
20%
IDN
BRA
RUS
JPN
AUS
NZL
USA
ZAF
NOR
NLD
CHL
CHE
GBR
IND
CAN
ISR
GRC
FRA
DEU
ITA
TUR
AUT
ESP
MEX
SWE
CHN
PRT
POL
ISL
DNK
FIN
BEL
EST
SVN
IRL
KOR
CZE
SVK
LUX
0%
HUN
10%
Of the UK’s total exports of domestic value-added in 2011, 63.7% reflected exports of intermediates, higher
than in 2009 (59.9%), in part reflecting the rebound in GVCs that were disproportionally affected by the
crisis, and higher than in 1995 (58.3%), (Figure 2). The UK’s total exports of domestic value added share in
intermediates in 2011 was higher than the OECD average of 61.5%.
Figure 2. Domestic value added content of gross exports by end-use category by country
percent, 1995 and 2011
Intermediate goods and services 2011
Final goods and services 2011
Total 1995
Intermediate goods and services 1995
100%
90%
80%
70%
60%
50%
40%
30%
20%
BRA
IDN
RUS
AUS
JPN
USA
NZL
NOR
ZAF
NLD
CHL
CHE
GBR
IND
CAN
GRC
ISR
FRA
TUR
DEU
ITA
AUT
ESP
SWE
MEX
POL
CHN
PRT
ISL
DNK
BEL
FIN
EST
SVN
KOR
IRL
CZE
SVK
LUX
0%
HUN
10%
1
Direct exports by Business services generated the greatest source (both direct and upstream) of domestic
value added in 2011, accounting for 13.9% of the total value added of exports. The next three most
important industries were Finance & insurance at 11.1%, Wholesale, retail & hotels at 9.3% (partly
reflecting tourism and upstream distribution services to exporters), and Chemicals at 6.2% (Figure 3a). The
large foreign contributions were in the Chemicals and Motor vehicles industries, which together contributed
5.2% of UK total exports.
The foreign content of exports increased across nearly all sectors between 1995 and 2011. The three
industries with the highest foreign value added shares in UK exports in 2011 were Coke & petroleum
(56.1%), Basic metals (51.7%), and Motor vehicles (44.4%), compared to 24.7%, 27.0% and 30.3% in 1995
(Figure 3b).
Figure 3a. UK industry share of domestic and foreign value content of gross exports
percent of total gross exports, 2011
Finance & insurance
Business services
Other services
Finance &
insurance
Business services
Other services
Transport &
telecoms
Wholesale, retail &
hotels
Other manufactures
Other transport
Motor vehicles
Electrical machinery
ICT & electronics
FVA contribution to gross exports, 2011
Machinery
Fabricated metals
Basic metals
Non-metallic
minerals
Rubber & plastics
Chemicals
Coke & petroleum
Textiles & apparel
Food products
Mining
Agriculture
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Wood & paper
DVA contribution to gross exports, 2011
Figure 3b. UK foreign value added content of gross exports
1995 and 2011
FVA share of gross exports, 2011
FVA share of gross exports, 1995
60%
50%
40%
30%
20%
Total
Transport &
telecoms
Wholesale, retail &
hotels
Other manufactures
Other transport
Motor vehicles
Electrical machinery
ICT & electronics
Machinery
Fabricated metals
Basic metals
Non-metallic
minerals
Rubber & plastics
Chemicals
Wood & paper
Textiles & apparel
Food products
Mining
Agriculture
0%
Coke & petroleum
10%
2
Of the total value of UK imports of intermediate products and services, 37.7% was subsequently embodied
in exports, slightly below the OECD average (39.3%) but above the share in 2009 (31.6%) (Figure 4),. The
products with the highest import shares were Basic metals (60.6%), Machinery (48.8%) and Motor vehicles
(45.6%).
Figure 4. UK imported intermediate inputs used for exports, by import category
percent of intermediate imports, 2008, 2009, and 2011
2011
2009
2008
70%
60%
50%
40%
30%
20%
Total
Other services
Business services
Finance & insurance
Transport & telecoms
Utilities
Wholesale, retail &
hotels
Other manufactures
Other transport
Motor vehicles
Electrical machinery
ICT & electronics
Machinery
Fabricated metals
Basic metals
Non-metallic minerals
Rubber & plastics
Chemicals
Coke & petroleum
Wood & paper
Textiles & apparel
Food products
Mining
0%
Agriculture
10%
The destination of domestic value added produced in the United Kingdom
Of the total domestic value added produced by the manufacturing sector in United Kingdom, over half
(52.5%) reflected foreign final demand in 2011, significantly up on 2009 (45.3%) and 2008 (44.9%), and
above the OECD average (41.9%) (Figure 5).
Figure 5. Manufacturing domestic value added in foreign final demand by country,
percent of total manufacturing value added, 2008, 2009, and 2011 (left insert = time series for United Kingdom)
2011
2008
60%
2008
2009
2010
2011
70%
2005
80%
2009
60%
50%
40%
30%
20%
10%
0%
2000
90%
1995
100%
50%
40%
30%
20%
LUX
IRL
HUN
SVK
ISL
SVN
EST
CZE
CHE
ISR
SWE
AUT
DNK
FIN
CHL
KOR
POL
DEU
BEL
PRT
GBR
CAN
NOR
ESP
FRA
ITA
RUS
NZL
NLD
MEX
ZAF
GRC
TUR
JPN
USA
IND
AUS
CHN
BRA
0%
IDN
10%
Note: Final demand excludes inventories: See also http://www.oecd.org/sti/ind/TiVA_2015_Guide_to_Country_Notes.pdf
3
At the total economy level, 24.0 % of UK domestic value added was driven by foreign final demand, but
significant differences exist across industries. Basic metals (78.9%,) and ICT & electronics (73.8%) had the
highest level of export orientation in United Kingdom, with the lowest shares in Agriculture (18.6%) and
Business services (23.8%) (Figure 6).
Figure 6. UK domestic value added in foreign final demand,
percent of value added by industry, 2008, 2009, and 2011
Total
Total Manufactures
Business services
Finance & insurance
Transport & telecoms
Wholesale, retail &
hotels
Other manufacturing
Other transport
Motor vehicles
Electrical machinery
2008
ICT & electronics
Machinery
Fabricated metals
Basic metals
Non-metallic minerals
Rubber & plastics
2009
Chemicals
Wood & paper
Textiles & apparel
Food products
Mining
Agriculture
Coke & petroleum
2011
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Note: Final demand excludes inventories: See also http://www.oecd.org/sti/ind/TiVA_2015_Guide_to_Country_Notes.pdf
In gross terms and value added terms the UK’s top three trading partners were the United States, Germany
and France. In value-added terms the share of exports going to the US (17.9%) was higher than in gross
terms (15.0%), reflecting UK value-added embodied exports of European partners. For imports, in valueadded terms, the United States was the most important source, displacing Germany (in first place on a gross
basis), in part reflecting the relatively high domestic value-added content of US exports (Figure 7, bottom).
Figure 7. UK exports to and imports from main partner countries
percent of total gross and value added exports and imports, 2011
Gross exports
Domestic value added embodied in foreign final demand
20%
15%
10%
5%
0%
USA
DEU
FRA
ESP
Gross imports
ITA
CHN
JPN
NLD
IRL
IND
JPN
NLD
Foreign value added in domestic final demand
14%
12%
10%
8%
6%
4%
2%
0%
USA
DEU
CHN
FRA
ESP
NOR
ITA
IND
4
Considering only exports of intermediate goods and services in value-added terms, the UK’s major export
destinations in 2011 were: the United States (14.2%), Germany (11.2%), Ireland (6.7%), and France (5.9%)
(Figure 8).
Figure 8. UK domestic value added embodied in intermediate exports to main partner countries
percent of total intermediate exports, in value added terms, 2008, 2009, and 2011
2011
2009
2008
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
USA
DEU
IRL
FRA
ESP
NLD
CHN
BEL
ITA
IND
The importance of services
In 2011 the services content of total exports in the UK was 63.5%, significantly above the OECD average
of 54.3% (Figure 9).
Figure 9. Services content of gross exports by country, gross and value-added terms,
percent of total gross exports, 2011
Domestic VA content
Foreign VA content
OECD average
SNA service export share
100%
80%
60%
40%
LUX
IRL
NLD
BEL
DNK
GRC
FRA
GBR
ISR
CHE
EST
SWE
ISL
ESP
IND
PRT
NZL
AUT
ITA
USA
FIN
TUR
POL
SVN
HUN
JPN
DEU
CZE
BRA
SVK
AUS
ZAF
CAN
RUS
CHN
KOR
MEX
NOR
IDN
0%
CHL
20%
Note: SNA services export shares include re-exports in the denominator, and include any actual differences in free on board and basic
prices (the distribution margin provided by resident distributors to resident exporters) in goods.
5
For exports of manufactured goods alone, 37.1% of the total value reflected services sector value-added,
slightly above the OECD average (36.9%). Of this share, the Wholesale, retail & hotels sector accounted for
13.0% of total gross exports, with Business services and Transport & telecoms accounting for 11.5% and
5.1% respectively (Figure 10).
Figure 10. Services value added embodied in manufacturing exports, by country,
percent of total gross exports, 1995 and 2011
Construction
Wholesale, retail & hotels
Transport & telecoms
Finance & insurance
Business services
Other services
1995, Total
50%
45%
40%
35%
30%
25%
20%
15%
10%
BEL
FRA
LUX
DNK
CHE
SWE
ITA
FIN
NZL
NLD
PRT
HUN
IRL
EST
POL
ISR
SVN
ESP
CZE
SVK
TUR
AUT
BRA
DEU
RUS
ISL
GBR
ZAF
AUS
NOR
IND
CAN
JPN
GRC
USA
MEX
CHN
KOR
IDN
0%
CHL
5%
At the individual sectoral level, the services content of exports was highest in Basic metals (44.7%), Motor
vehicles (42.8%) and Other transport (42.5%) (Figure 11).
Figure 11. UK Services content of gross exports, by exporting industry and service category
percent of gross exports by industry 2011
Other manufacturing
OECD average
Other transport
Motor vehicles
Electrical machinery
Other services
ICT & electronics
Machinery
Business services
Fabricated metals
Basic metals
Non-metallic
minerals
Paper, print, publsh
Wood
Textiles & apparel
Food products
Mining
Agriculture
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Finance & insurance
Rubber & plastics
Transport & telecoms
Chemicals
Wholesale, retail & hotels
Coke & petroleum
Construction
6
The origin of domestic consumption
In 2011, 23.0% of UK total final domestic consumption reflected foreign content, of which Europe
contributed 12.2 percentage points (pp), NAFTA 3.2 pp, East and Southeast Asia 3.6 pp, South and Central
America 0.4 pp and other regions 3.6 pp (Figure.12).
Figure 12. Foreign value added content of domestic consumption by country
by source region, 2011
Europe
NAFTA
East and Southeast Asia
South and Central America
Other regions
60%
50%
40%
30%
20%
IRL
LUX
SVK
SVN
CZE
HUN
ISL
EST
BEL
AUT
KOR
POL
CHE
FIN
PRT
ISR
CHL
SWE
DEU
GBR
DNK
ITA
ESP
NZL
GRC
ZAF
FRA
NLD
NOR
TUR
IDN
CAN
RUS
IND
AUS
JPN
USA
BRA
CHN
0%
MEX
10%
Further Information
The information included in this note is based on the 2015 edition of the Trade in Value Added (TiVA) database.
» Access the data at http://oe.cd/tiva
» Please contact us with your questions at [email protected]
7