In order to deepen integration of East Asia and Latin America, there is a need to analyze existing Global Value Chains (GVCs) within and between the two regions. This user guide is designed to equip researchers with the tools necessary to understand and use value added decompositions of trade data. Such decompositions are key to the quantitative analysis of trade within GVCs and the various linkages across sectors and countries that they imply. Exercises in this user guide are based on ADB MRIO data, now covering 73 countries and 35 sectors. The analysis shows a basic Leontief decomposition into value added components, and discusses the limitations of that approach. It then presents examples of how to perform policy analysis based on those data. All analysis is accompanied by transparent Stata code in which each analytical step is made explicit; all data and .do files are freely available with the user guide. Rather than focus on proofs and derivations, the interest of the user guide is in understanding the intuition and policy-relevance of this approach, as well as relevant limitations. Readers will be equipped to undertake their own analysis, principally using decompositions made available by ADB, but also by using appropriate software to calculate their own decompositions.
Stata codes are available HERE.