Effective Way to Measure the Specialization Levels of an Economy in the Era of Global Value Chains

Abstract

Traditionally, comparative advantages have been measured by the volume of gross exports and with formulas that give asymmetric results. However, with the globalization of value chains, other indices have emerged to partially solve some of these problems. The objective of this study is to create a new index for a linear comparison of different economies around the world at the sectoral specialization level, and without the problem of double international counting originated in the global value chains. The methodology used focuses on the properties of the new index and on the comparison with a previous index that only solved the problem of double counting. The results confirm that the new indicator is more reliable than the other index, especially in more advanced sectors of global value chains. Therefore, it should be used to establish policies related to international trade by different economies and global organizations.