Global Value Chains and their Determinants: Comparative Analysis of OECD and BRICS Countries with Special Reference to Services

Abstract: 
The internationalization of the supply chain has brought a new term to the forefront known as Global Value Chains (GVCs). The reduction in trade costs, increased trade facilitation, reduction in tariffs, liberalization of domestic economy, progress in the field of ICT etc. are some of the factors that have made GVCs workable on the international platform. This paper brings out the importance of OECD and BRICS countries in GVCs as the exporter. For the purpose of the study the participation of the selected countries in GVCs has been measured and comparison is made on the following points - share of intermediate products in gross exports and imports, domestic and foreign value added content in gross exports, domestic and foreign value added content of services in gross exports, participation index, industry wise comparison with special reference to services and finally as to what the policy and non policy factors are that affect the country participation in GVCs.The major findings of the paper are as follows: the share of BRICS countries has registered an increase in the share of foreign value added content in gross exports and at the same time they are the major exporters of intermediate products in the world market. The same is true with respect to domestic and foreign value added part of services; the participation index along with backward and foreign integration index has seen an increase for BRICS.
Main Article: 

Introduction
In the last two decades, there has been a higher degree of interdependency in global trade and production network. This interdependency is justified from the fact that there is an increase in the share of intermediate products in the gross exports and imports of the countries. Today, the share of intermediate products in gross exports and imports are more than 80% for some countries. The internationalization of the supply chain has brought a new term to the forefront known as Global Value Chains (GVCs). Now, the production is not confined to any one country but spread across a number of countries and there is an increased trade of intermediate goods. The reduction in trade costs, increased trade facilitation, reduction in tariffs, liberalization of domestic economy, progress in the field of ICT etc. are some of the factors that have made GVCs workable on the international platform.
For measuring the competitiveness of a country in world trade, a large numbers of indexes were developed and the popular ones are Revealed Comparative Advantage (RCA), Trade Intensity (Export & Import), Intra-Industry trade etc. Among them, Intra-Industry Trade index tries to capture the extent of trade in the same industry but still value added trade was not accounted for. But, there was no measure to find out the extent of network production. The economic literature has been addressing this issue through the proposal of new indicators that capture the role of GVCs, starting from the contributions of Feenstra and Hanson (1999) and Hummels et al. (2001), Johnson and Noguera (2012) and Stehrer (2012) to those of Koopman et al. (2013), each tried to find out the extent of foreign and domestic content in the exports of a country.
The history of GVCs dates back to 1970s and 1980s when the well known retailers JC Penny, Sears, Kmart and manufacturing enterprises IBM, General Motors and Volkswagen set up their production unit in East Asia, Mexico and a handful of other locations around the world. The main purpose of finding the production unit outside, the home country could lower production costs and getting the finished product at lower prices. The developing countries also find these places in the production network with the process of liberalization gaining momentum after 1990s when India also opened its door to foreign investment and continued on liberalizing its economy. Today, India along with other emerging economies- Brazil, Russia, China and South Africa the so called BRICS countries have added huge product and labor markets Faced with slow growth at home, large “lead” firms in GVCs rushed to set up operations in BRICS countries, especially China, in an effort to carve out brand recognition and market share in rapidly expanding consumer markets and to cut costs on goods produced for export back to home markets. This greatly accelerated the globalization process, since these giant economies offered seemingly inexhaustible pools of low-wage workers, increasingly capable manufacturing and trade infrastructures, abundant raw materials, and huge under-served domestic markets with incipient middle classes.
GVCs' concept is not confined to goods but is prominent in the case of services such as ‘offshore services’. The industry includes a wide array of skill-intensive activities that are now performed in developing countries, which were once considered strictly the domain of the industrialized world. They include information technology outsourcing (ITO), business process outsourcing (BPO), and knowledge process outsourcing (KPO), and other advanced activities such as research and development (R&D). These offshore services are very much important from the view of developing economy as they have employment potential and promote entrepreneurship.
Trade liberalization has resulted in falling trade barriers, in particular for tariffs, and has further reduced costs. Liberalization of investment has allowed firms to disperse their activities, and liberalization in emerging economies has helped to extend GVCs beyond industrialized countries. Regulatory reforms in key transport and infrastructure sectors, such as air transport, have also brought down costs. GVCs enable firms to become more efficient and benefit from economies of scale and scope.
These developments have enabled companies to look at relative costs and factor endowments and build an efficient value chain across firms and locations. Sourcing inputs from low-cost or more efficient producers, domestically or internationally, and within or beyond the firm’s boundaries, can mean important cost advantages. Outsourcing production also enables firms to benefit from the economies of scale and scope that specialised suppliers can provide.

Literature Review
There are the two sets of literature available on GVCs. First, being the research studies carried out by independent researchers in finding out the importance of GVCs and second body of literature deals with the research studies being undertaken by UNCTAD, OECD, WTO and World Bank. The first set of literature includes the case studies undertaken with special focus on some sector or specific industry. The second set of literature includes the work of the international organizations in the field of GVCs and they also provide the data for further research. Their research studies mainly focus on the policy issues that affect the countries' GVCs.
Most of the studies in the past have focused on the share of imported to total intermediate inputs. The study by Feenstra and Hanson (1997) compare the share of imported inputs to total intermediate inputs for Canada, Japan, US and UK and finds out that the share of imported inputs to total intermediate inputs is more for smaller economies than for the larger economies. Again, the study by Feenstra and Jensen (2009) was undertaken and the results for the manufacturing were that imported inputs to total intermediate inputs increased by the factor of 200 to 300 per cent for the year 1980-2006.
A number of other studies also report evidence identifying the increased trade in intermediate inputs. For example, estimates by Campa and Goldberg (1997) based on input-output tables show large increases over the period 1974-1995 in the share of imported intermediate inputs in manufacturing industry output for the U.S., Canada and the UK.
The work of Hillbury focuses on the international production fragmentation. For this purpose, he uses the following dataset first Input-Output tables provided by OECD, and secondly he used trade data from WITS. His work is related to the US and he tries to evaluate what the effect of transport would be on the imports of the inputs for the US economy and policy measures to be undertaken.
Koopman et al. (2008) showed that the share of foreign value added in Chinese manufactured exports is about 50%. Looking specifically at processing exports which benefit from duty exemptions on imported raw material and other inputs ‘as long they are used solely for export purposes’, this foreign share rises up to 82%. As a direct corollary of this, GVCs might also qualify the large trade (bilateral) imbalances between countries. The work by Kierzkowski and Chen (2010) have shown that taking into account the imports of parts and components by both countries reduced the large US deficit with China by approximately half, given that a lot of high value intermediates are exported from the United States to China.
The product specific study by Linden et al. (2009) and Dedrick et al. (2010) provides a detailed analysis of the various activities in the production of the so-called Video iPod, the 30GB version of Apple’s fifth generation iPods. Their case study shows the strong global fragmentation of the production process of high-end electronic products. The lead firm in this production chain is Apple, a US multinational company, which has designed the iPod and organises its production. The iPod is manufactured in Mainland China through assembling of several hundreds of components and parts. Based on professional industry sources, Linden et al. traced the origins and values of the various components and found that most of them, in particular the more expensive ones, did not originate from China, but from Japan, the US, Korea, Taiwan and other Asian countries. The largest part of the value creation throughout the production process was done and captured by the producers of high value components (United States and Japan) and the seller of the iPod (Apple in the United States). The iPod example shows that the concept of competitiveness may sometimes need to be assessed at a detailed level, in order to fully understand what drives the international performance of countries.
The work of Koopman et.al (2010) uses a new conceptual framework to measure the sources of value added trade in global production networks. What they found that East Asian economies have more share in the international supply network and the developed economies uses more intermediate inputs to produce exports and they also brought forward the importance of trade cost.
The work of Nadeem Ahmad deals with the analysis of OECD WTO January 2013 data, He analyzed the transport and electronics sector specifically and computed the domestic and foreign value added content in gross exports for the available countries. He also emphasized on the role of services in exports and as per his estimates the share of services in exports for OECD countries is more than 50%.
The work of Rashmi Banga (2013) applied OECD WTO TIVA May 2013 database for measuring the participation of a country in GVCs. What she found was that 67% of the total global value created under GVCs accrue to OECD and whereas the share of NICs and BRICS countries is only 25%. Her paper also highlighted the role of services in the total value added exports.
The paper by Amador J. et. al. (2013) worked on finding out the domestic and foreign value added content in exports. He applied the Koopman (2013) and Stehrer (2013) formula. Their study covers the period 2000-2011. The results show that intra euro-area GVCs are strong and only marginally weakened during the rebound in 2011 after the global trade collapse. Between 2000 and 2007, the euro area favored the reinforcement of "regional integration of production" among member countries, even during a period of fast spreading of value chains at the global level. Taking the average euro area country, the share of value added originated in other euro area countries in gross exp orts was equal to 11.6 per cent in 2007 (16.6 per cent if the value added sourced from all the E U countries is considered)
Finally, the latest work of Kowalski, P. et. al. (2015) exclusively deals with the trade and trade related policies for developing countries in GVCs. Their paper brought forward a number of factors on which GVCs' participation of the country depends. For giving the numerical value, they applied the Gravity Model of Trade, which has been used extensively in trade. They regressed the backward and forward participation ration against the non-policy factor, core trade and investment policy related factors and other policy related factors and found out that backward participation is affected more than 55% whereas forward participation R-squared value is more than 20%. Their paper also deals with the importance of services and their share in GVCs. For services, they computed the forward linkages at sector levels and found that transport, telecommunications, whole and retail trade have higher forward linkages for developing economy.
Coming to the second form of literature comprises the work done by international agencies and institutions in the field of GVC. The major work is done by WTO OECD Tiva, which not only provides the database but also publishes the policy paper from time to time. Apart from this, UNCTAD is also working in providing the data and bringing the policy issue to the forefront. World Bank publishes in its World Development Indictors the share of value added trade to GDP and finally the work at Purdue University, which has developed GTAP.
The joint report prepared by OECD, WTO and UNCTAD (2013) highlighted the importance of GVCs for trade, investment, development and jobs. With each point specifically dealing with the policy issues related with it. With respect to trade policy, the emphasis was on tariff, trade facilitation, NTM and trade agreements. From the development point of view, the report focuses on the growing economic and social inequalities and on investment front the role that is being played by MNEs. The report also brought forward role of services in GVCs.
Another joint work by OECD, WTO and World Bank Group (2014) not only brought forward the impact of GVCs on trade, investment and development, but put emphasis on the factors that promote/discourage GVCs and at the same time this report was further extension of the previous report as this report has bifurcated the domestic and international agendas to improve GVC factors such as skill enhancement, innovation, social and environment policy, local market etc. find place in the report.
Yet another study by UNCTAD brings together value added trade and invest-ments. Their study uses UNCTAD Eora GVCs database, which includes 187 countries available for 1990-2010. The report brought forward the increasing role of TNC on international network and the role of FDI, and from the point of view of development the report correlated GVCs and GDP of developed and developing countries.
The beauty of this work is that till now most of the work has highlighted the GVCs as a whole i.e. international comparison is done or covered few sectors with least work on the importance of services in GVCs. Most of the work is available on China and India, the two major emerging markets but not the other emerging economies- Brazil, Russia, Indonesia and South Africa. This paper compares the performance of BRICS countries with OECD countries about which no studies have been made so far and special focus is on the services contribution to GVCs with industry wise comparison for OECD and BRICS.

Objectives
• Comparing the share of intermediate products in the gross exports and imports and change over the period under study.
• Comparing domestic and foreign value added content in gross exports.
• Comparing the participation index of the selected countries in GVCs, with emphasis on backward and forward integration.
• Share of services in domestic and foreign value added content of gross exports.
• Industry wise comparison of domestic and foreign value added content of services in gross exports.
• Origin of Value Added in gross exports for OECD and BRICSs country exportd and their contribution to OECD gross exports.
• Extent to which Policy/Non policy factors affect the country participa-tion in GVCs.

Research Methodology
Methodologically, this study draws on recent developments and advances in the field of GVC analysis. However, the measurement of GVCs and value added in trade poses some challenges. First and foremost, availability and reliability of data is a key issue. GVC analyses draw on input-output tables, which measure the relationships between the producers of goods and services (including imports) in an economy and the users of the same goods and services (including exports). However, global input-output tables are hardly available. In the last couple of years, several attempts were made to provide global input-output data: Trade in Value Added Initiative (Tiva) of the OECD and WTO, the Global Trade Analysis Project (GTAP) at Purdue University, the External Trade Organization (IDE-Jetro) project at Institute for Development Economies Japan and WTO as well as the World Input Output Database (WIOD) project. The emergence of these different classes of global input-output data enables a measurement of GVC. Second, methodologically, within the literature there is no agreed measurement or indicator to analyze GVCs. Depending on the applied global input-output dataset regarding level of sectoral and regional resolution, the used indicators are various: degree of vertical specialisation, foreign and domestic valued added in exports, participation rate, distance to final demand, value added exports, revealed comparative advantage and many more. These two issues underline the complexity of GVCs research as well as the importance of further studies and deeper research. Moreover, since the rise of GVCs started in the 1990s and global databases are only available for a short period of time; this research field is relatively new.
For the purpose of this study, secondary data has been used. This study uses the OECD WTO Tiva JUNE 2015 database, this is the latest database available for OECD member countries plus some non members and the BRIICS’s countries are in the database. The latest year for which UNCTAD Eora database is available is 2010 whereas in TIVA the latest available year is 2011. GTAP is beyond the scope of this paper as the dataset are not available free of cost. Years for which Tiva data is available are- 1995, 2000, 2005, 2008, 2009, 2010 and the latest release 2011 (participation index is available till 2009).
Countries selected for the comparison are all OECD member countries and BRICS- Brazil, China, India, Indonesia, Russia and South Africa. Including Indonesia among the BRICS countries is purposeful because presently the share of intermediate products in the gross exports and imports are quite high and secondly the contribution it had made to OECD countries exports is on equal footing with the other emerging economies.

Analysis
Share of Intermediate Products in Gross Exports and Imports
In the last two decades, the share of intermediate products in gross exports and imports has registered a significant growth. In the case of some countries, their share is more than 80%. All the countries have registered an increase in the trade of intermediate products. Table 1.1 shows the share of intermediate products in the gross exports and imports of OECD and BRICS countries. The average share of intermediate products in the gross exports for OECD and BRICS countries for the year 2011 is 62.64% and 69.12% respectively and both have registered increase in the share by 8% and 6% respectively in the last two decades.

Table 1.1: Share of Intermediate Products in Gross Exports and Imports of OECD and BRIICS for 1995 & 2011
Country Export Share Change over 1995 Import Share Change over 1995
1995 2011 1995 2011
Australia: 64.75 78.43 13.68 54.53 51.69 -2.84
Austria: 54.12 60.52 6.40 52.06 62.09 10.03
Belgium: 59.75 66.20 6.45 62.70 69.57 6.87
Canada: 63.07 70.19 7.12 57.59 57.49 -0.11
Chile: 73.48 80.42 6.93 48.47 53.27 4.80
Czech Republic: 59.05 60.09 1.04 67.11 76.62 9.52
Denmark: 54.55 62.62 8.07 57.36 72.61 15.26
Estonia: 52.76 60.25 7.48 59.83 66.44 6.61
Finland: 65.91 67.89 1.97 66.38 70.86 4.48
France: 55.03 57.06 2.03 57.46 59.89 2.43
Germany: 57.62 62.88 5.26 49.98 62.04 12.06
Greece: 42.59 53.98 11.40 51.90 55.04 3.15
Hungary 49.91 58.53 8.62 63.88 75.52 11.64
Iceland 50.43 64.19 13.76 47.50 62.19 14.69
Ireland 55.95 61.27 5.32 71.58 80.94 9.36
Israel 50.95 57.61 6.66 57.62 58.44 0.82
Italy 50.42 57.67 7.25 61.52 65.35 3.82
Japan 59.23 66.80 7.57 59.66 69.99 10.33
Korea 58.14 68.01 9.88 67.95 82.88 14.93
Luxembourg 62.83 61.89 -0.94 66.08 82.00 15.92
Mexico 59.98 62.64 2.66 61.85 60.03 -1.82
Netherlands 58.45 61.60 3.15 62.05 68.30 6.25
New Zealand 49.83 50.87 1.04 57.44 53.72 -3.72
Norway 74.19 82.15 7.95 62.03 61.01 -1.03
Poland 57.37 59.85 2.49 63.88 66.96 3.08
Portugal 47.74 54.15 6.40 57.60 63.63 6.03
Slovak Republic 60.40 62.54 2.14 65.14 70.60 5.46
Slovenia 52.93 61.66 8.73 59.64 63.82 4.19
Spain 47.59 55.38 7.79 64.21 64.36 0.15
Sweden 61.51 65.22 3.71 64.96 63.46 -1.50
Switzerland 56.51 61.25 4.73 49.28 54.50 5.22
Turkey 44.43 50.46 6.03 51.60 64.79 13.19
United Kingdom 58.91 64.54 5.63 57.32 59.73 2.42
United States 55.59 61.10 5.51 59.66 59.91 0.26
Avg. Of OECD 56.65 62.64 59.35 64.99
Brazil 61.45 68.76 7.31 55.87 58.26 2.39
China 50.76 55.92 5.15 70.66 80.39 9.74
India 48.75 59.95 11.20 67.43 72.96 5.53
Indonesia 64.52 71.97 7.44 58.32 67.48 9.16
Russia 73.31 83.45 10.14 49.27 61.89 12.62
South Africa 70.73 74.70 3.96 53.15 55.98 2.83
Avg. Of BRIICS 61.59 69.12 59.1 66.2
Source: Authors Calculation using OECD Tiva June 2015

Looking at the average import share of intermediate products, situation is same for BRICS countries with higher share of intermediate inputs in gross imports than OECD countries. Among OECD countries, the highest share of intermediate inputs in gross exports is for Norway followed by Norway and Australia with 82.15% and 80.42% and 78.43% share respectively. For BRICS countries, highest share in gross exports is Russia followed by South Africa and Indonesia with the share at 83.45%, 74.70% and 71.97% respectively. Thus, combining both the groups, the top slot is attained by Russia.
Taking into account the change that took in the share of intermediate products in gross exports from 1995 till 2011, it can be seen that maximum increase occuredin Iceland followed by Australia and Greece. Their exports have registered an increase in share of intermediate products by 13.76%, 13.68% and 11.40% respectively. Among BRICS countries, the maximum change has accrued to India followed by Russia with change in share by 11.20% and 10.14% respectively.
Coming to the share of intermediate products in the gross imports for the period under study, the average share of OECD and BRICS countries have seen an increase of 7% and 6% respectively. The average for BRICS countries is 66.2% for the year 2011 and for OECD countries it is 64.99% for the same year. In the year 1995, the intermediate product share was nearly the same at 59%, thus, the increase is more to BRICS than to OECD.
Among OECD countries, intermediate products share in the gross imports are highest for Korea followed by Luxembourg and Ireland with share standing at 82.88%, 82% and 80.94% respectively. For BRICS countries, China holds top position in terms of intermediate product share in gross imports followed by India and Indonesia with share standing at 80.39%, 72.96% and 67.485 respectively.
Comparing the change in the share of intermediate products in gross imports for the period under study, the OECD countries that have registered a maximum increase in the share is Luxembourg followed by Denmark and Korea--the share of intermediate products imports have increased by 15.92%, 15.26% and 14.93% respectively. For BRICS countries, the top slot is held by Russia followed by China and Indonesia--share increased by 12.62%, 9.74% and 9.16% respectively.
Domestic and Foreign Value content in Gross Exports
Table 1.2 shows the domestic value added content in gross exports of the OECD member countries and BRICS covering seven years data from 1995-2011. For OECD countries, the average for DVA stands at 77.24% in 1995 and it had decreased constantly till 2008 with some revival in 2009 and finally reached 69.54% in 2011. If one compares the decrease in the share of DVA for the period then maximum reduction occurred in the case of Korea, Hungary and Luxembourg, their share reduced by 19.30, 18.62 and 18.55 points respectively and the country which has registered increase in its share is Norway, the Netherlands and Canada

Table 1.2: Share (%) of Domestic Value Added Content in Gross Exports of OECD and BRIICS.
Country 1995 2000 2005 2008 2009 2010 2011 Change over 1995
Australia 87.53 83.71 87.44 85.58 86.17 86.64 85.54 -1.99
Austria 77.93 74.22 72.95 70.76 74.27 72.5 71.24 -6.68
Belgium 68.54 64.79 68.19 62.16 68.21 68.1 64.63 -3.91
Canada 75.14 72.67 76.16 76.74 77.24 76.21 76.16 1.03
Chile 85.57 76.71 80.26 73.59 79.91 81.06 78.8 -6.77
Czech Republic 68.88 60.97 57.08 57.02 59.24 55.41 54.29 -14.59
Denmark 75.83 72.44 71.44 64.2 67.82 68.3 65.86 -9.97
Estonia 64.03 55.07 57.09 66.2 70.85 66.45 64.28 0.26
Finland 75.51 69.09 67.74 65.8 68.72 67.63 64.81 -10.7
France 82.18 76.76 76.21 74.65 77.97 75.78 74.36 -7.82
Germany 84.73 79.18 78.37 74.75 77.65 76.14 74.03 -10.7
Greece 83.65 75.71 78.17 73.06 78.29 77.19 74.32 -9.34
Hungary 69.4 48.29 51.52 52.78 54.33 50.59 50.79 -18.62
Iceland 82.62 75.22 70.47 69.56 68.74 67.9 65.96 -16.66
Ireland 61.07 56.11 57.48 54.72 56.89 55.19 55.28 -5.79
Israel 76.36 77.24 73.03 72.23 76.68 75.23 73.72 -2.64
Italy 82.23 79.58 77.65 73.61 78.31 74.58 73.12 -9.12
Japan 93.89 92.19 88.45 83.43 88.17 86.78 84.85 -9.04
Korea 77.4 69.7 66.72 57.85 62.16 60.49 58.09 -19.31
Luxembourg 57.33 45.26 43.91 37.92 42.16 39.94 38.79 -18.55
Mexico 72.48 65.49 66.89 67.1 66.34 65.45 68.17 -4.31
Netherlands 76.06 76.61 80.95 78.73 80.6 79.11 78.68 2.62
New Zealand 82.81 77.36 83.98 80.05 83.97 83.17 82.81 0
Norway 79.14 82.8 83.34 82.33 81.37 81.38 82.1 2.97
Poland 83.38 74.92 71.14 67.72 71.85 67.87 66.95 -16.44
Portugal 72.22 69.12 67.56 64.53 69.98 67.19 66.22 -6
Slovak Republic 67.48 55.6 52.56 52.82 55.92 53.86 52.94 -14.54
Slovenia 67.71 63.51 62.02 63.36 68.47 64.83 63.53 -4.18
Spain 80.52 73.64 73.39 71.58 77.08 74.6 72.59 -7.93
Sweden 73.36 70.15 70.33 66.63 70.05 70.03 69.88 -3.48
Switzerland 81.72 77.7 73.53 75.82 77.53 76.76 77.18 -4.54
Turkey 89.54 85.26 78.65 74.6 78.15 77.14 74.05 -15.49
United Kingdom 81.25 81.15 82.39 79.25 80.13 78.07 76.24 -5.01
United States 88.15 86.84 86.53 83.49 87.65 85.93 84.42 -3.73
Avg. Of OECD 77.22 71.91 71.58 69.25 72.44 70.81 69.55 -7.67
Brazil 91.51 87.37 88.01 86.97 89.5 89.19 88.82 -2.7
PR China 66.51 62.5 62.34 67.84 68.86 67.74 67.57 1.06
India 89.95 87.8 81.86 75.97 78.12 76.73 74.96 -14.98
Indonesia 86.77 82.43 83.05 84.78 88.41 88.54 87.82 1.05
Russia 86.08 81.15 86.8 85.26 86.36 86.14 85.7 -0.37
South Africa 86.01 81.78 80.05 75.65 80.71 81.73 80.31 -5.71
Avg. Of BRIICS 84.47 80.51 80.35 79.41 81.99 81.68 80.86 -3.61
Source: Authors Calculation using OECD Tiva June 2015

with their DVA content increasing by 2.97, 2.62 and 1.03 respectively. Coming to BRICS countries, their average share with respect to OECD member countries is higher and the trend registered by these countries is also the same i.e. the share of DVA in domestic exports has registered a downwards trend. Countries which have registered highest fall in the DVA is India followed by Brazil and South Africa with reduction of 14.98, 2.69, 5.70 respectively. For China and Indonesia, their share DVA has increased by 1.05 whereas for Russia no such major change occurred.
Comparing the FVA content in gross exports, one can clearly see from table 1.3 that all the nations have seen an increase in the FVA in exports and the average for OECD countries for 2011 is 30.45 whereas for BRICS countries is 19.13. Among the OECD member countries Luxembourg followed by Hungry and Slovakia Republic which have the highest content of FVA in exports with 61.21, 49.21 and 47.05 share in 2011 and coming to BRICS countries, the maximum share is enjoyed by China followed by India, but when comparing the increase in the FVA content in exports for the period then maximum increase occurred among OECD countries mainly in Korea where FVA content increased by 19.31% and among BRICS countries, the major change happened to India and the share of FVA content increased by 15%.

Participation Index- Backward and Forward Integration
Table 1.4 shows the Participation Index of OECD and BRICS countries for six years from 1995-2009. The average value of the index for OECD and BRICS countries stands at 50.82 and 42.31 respectively. In the case of OECD countries, the maximum value is attained by Korea followed by Czech Republic and Ireland with their index value 65.02, 62.37 and 61.10 respectively whereas for BRICS countries, the maximum value is for Russia followed by China and Indonesia with their value at 51.82, 46.05 and 43.72 respectively.
Participation Index is further divided into Backward and Forward Integration Index. Index values for OECD and BRICS countries are shown in Table 1.5 and 1.6 respectively. The average of backward index for OECD and BRICS countries stands at 29.00 and 16.39.00 for the year 2009, the trend in increase and decrease in the average value followed by both the groups is same. Among OECD countries maximum value is attained by Luxembourg followed by Slovak Republic and Ireland with the value of index as 58.88, 44.34 and 42.31 respectively. Among BRICS countries, the top slot is attained by China followed by India and South Africa with 32.63, 21.92 and 14.41 values respectively. Forward index for OECD and BRICS countries shows the reverse results i.e. the index value for

Table 1.3: Share (%) Foreign Value Added Content in Gross Exports of OECD and BRIICS
Country 1995 2000 2005 2008 2009 2010 2011 Change over 1995
Australia 12.47 16.29 12.56 14.42 13.83 13.36 14.46 1.99
Austria 22.07 25.78 27.05 29.24 25.73 27.5 28.76 6.68
Belgium 31.46 35.21 31.81 37.84 31.79 31.9 35.37 3.91
Canada 24.86 27.33 23.84 23.26 22.76 23.79 23.84 -1.03
Chile 14.43 23.29 19.74 26.41 20.09 18.94 21.2 6.77
Czech Republic 31.12 39.03 42.92 42.98 40.76 44.59 45.71 14.59
Denmark 24.17 27.56 28.56 35.8 32.18 31.7 34.14 9.97
Estonia 35.97 44.93 42.91 33.8 29.15 33.55 35.72 -0.26
Finland 24.49 30.91 32.26 34.2 31.28 32.37 35.19 10.7
France 17.82 23.24 23.79 25.35 22.03 24.22 25.64 7.82
Germany 15.27 20.82 21.63 25.25 22.35 23.86 25.97 10.7
Greece 16.35 24.29 21.83 26.94 21.71 22.81 25.68 9.34
Hungary 30.6 51.71 48.48 47.22 45.67 49.41 49.21 18.62
Iceland 17.38 24.78 29.53 30.44 31.26 32.1 34.04 16.66
Ireland 38.93 43.89 42.52 45.28 43.11 44.81 44.72 5.79
Israel 23.64 22.76 26.97 27.77 23.32 24.77 26.28 2.64
Italy 17.77 20.42 22.35 26.39 21.69 25.42 26.88 9.12
Japan 6.11 7.81 11.55 16.57 11.83 13.22 15.15 9.04
Korea 22.6 30.3 33.28 42.15 37.84 39.51 41.91 19.31
Luxembourg 42.67 54.74 56.09 62.08 57.84 60.06 61.21 18.55
Mexico 27.52 34.51 33.11 32.9 33.66 34.55 31.83 4.31
Netherlands 23.94 23.39 19.05 21.27 19.4 20.89 21.32 -2.62
New Zealand 17.19 22.64 16.02 19.95 16.03 16.83 17.19 0
Norway 20.86 17.2 16.66 17.67 18.63 18.62 17.9 -2.97
Poland 16.62 25.08 28.86 32.28 28.15 32.13 33.05 16.44
Portugal 27.78 30.88 32.44 35.47 30.02 32.81 33.78 6
Slovak Republic 32.52 44.4 47.44 47.18 44.08 46.14 47.06 14.54
Slovenia 32.29 36.49 37.98 36.64 31.53 35.17 36.47 4.18
Spain 19.48 26.36 26.61 28.42 22.92 25.4 27.41 7.93
Sweden 26.64 29.85 29.67 33.37 29.95 29.97 30.12 3.48
Switzerland 18.28 22.3 26.47 24.18 22.47 23.24 22.82 4.54
Turkey 10.46 14.74 21.35 25.4 21.85 22.86 25.95 15.49
United Kingdom 18.75 18.85 17.61 20.75 19.87 21.93 23.76 5.01
United States 11.85 13.16 13.47 16.51 12.35 14.07 15.58 3.73
Avg. Of OECD 22.78 28.09 28.42 30.75 27.56 29.19 30.45 7.67
Brazil 8.49 12.63 11.99 13.03 10.5 10.81 11.18 2.7
PR China 33.49 37.5 37.66 32.16 31.14 32.26 32.43 -1.06
India 10.05 12.2 18.14 24.03 21.88 23.27 25.04 14.98
Indonesia 13.23 17.57 16.95 15.22 11.59 11.46 12.18 -1.05
Russia 13.92 18.85 13.2 14.74 13.64 13.86 14.3 0.37
South Africa 13.99 18.22 19.95 24.35 19.29 18.27 19.69 5.71
Avg. Of BRIICS 15.53 19.49 19.65 20.59 18.01 18.32 19.14 3.61
Source: Authors Calculation using OECD Tiva June 2015

BRICS countries is higher than the average of OECD countries. Forward index value for the year 2009 for BRICS countries as a whole stands at 25.42 whereas for OECD countries it is 21.82. Among BRICS countries, the maximum value is attained by Russia followed by Indonesia and Brazil with 44.93, 29.30 and 27.17 respectively. Among OECD member countries, Norway is followed by Chile and Japan with index value 38.83, 33.75 and 32.95 respectively.

Table 1.4: Participation Index of OECD and BRIICS
Country 1995 2000 2005 2008 2009 Change over 1995
Australia 33.64 39.63 44.35 49.03 43.81 10.17
Austria 48.37 55.8 58.03 59.4 55.85 7.48
Belgium 57.32 62.51 65.54 62.77 57.62 0.3
Canada 33.17 40.92 38.37 38.25 34.78 1.6
Chile 37.92 43.23 51.3 57.25 52.21 14.29
Czech Republic 51.49 61.34 65.05 63 62.38 10.89
Denmark 45.1 45.2 53.91 54.99 50.98 5.87
Estonia 52.53 68.71 67.76 59.09 54.51 1.98
Finland 49.7 56.18 59.52 60.68 56.29 6.59
France 39.76 47.08 48.6 49.03 45.88 6.12
Germany 41.28 48.79 50.68 51.94 49.48 8.19
Greece 30.82 44.88 42.36 47.43 43 12.18
Hungary 41.76 63.37 68.86 62.76 56.61 14.85
Iceland 43.34 54.5 54.79 56.84 55.24 11.89
Ireland 51.42 66.61 67.2 63.85 61.1 9.68
Israel 42.8 52.87 57.27 54.05 50.79 7.99
Italy 38.66 45.57 49.26 45.3 41.77 3.1
Japan 29.26 36 43.39 50.05 47.75 18.48
Korea 37.93 52.06 63.94 68.4 65.03 27.1
Luxembourg 59.82 70.02 72.58 74.65 71.64 11.82
Mexico 36.86 41.15 40.68 44.66 41.79 4.93
Netherlands 52.8 58.78 58.56 59.61 56.76 3.96
New Zealand 30.63 35.57 34.37 40.93 34.1 3.47
Norway 49.43 52.16 59.27 59.15 54.14 4.71
Poland 32.89 47.38 55.3 52.19 48.34 15.45
Portugal 44.26 47.31 44.36 56.2 51.41 7.14
Slovak Republic 56.36 69.49 70.63 67.51 62.23 5.87
Slovenia 45.36 58.16 60.42 57.26 52.63 7.26
Spain 40.27 47.38 49.75 45.5 41.86 1.59
Sweden 49.69 54.79 56.72 58.5 55.69 6
Switzerland 42.77 49.13 53.04 55.02 52.46 9.69
Turkey 24.69 33.88 36.4 42.87 37.73 13.04
United Kingdom 42.52 46.52 48.22 45.21 42.4 -0.12
United States 32.87 40.22 43.44 44.28 39.83 6.96
Avg. Of OECD 42.57 51.09 53.94 54.64 50.83 8.25
Brazil 31.3 34.57 39.79 40.7 36.2 4.9
P R China 25.72 32.57 48.63 47.62 46.06 20.34
India 23.88 31.84 42.78 46.07 42.27 18.39
Indonesia 33.52 42.99 49.23 49.24 43.72 10.21
Russian Federation 44.01 51.28 57.47 58.36 51.83 7.82
South Africa 43.26 48.14 32.65 36.85 33.82 -9.44
Avg. Of BRIICS 33.62 40.23 45.09 46.47 42.32 8.7
Source: Authors calculation using OECD Tiva June 2015.

Table 1.5: Backward Integration Index of OECD and BRIICS
Country 1995 2000 2005 2008 2009 Change over 1995
Australia 11.83 13.54 12.96 13.93 12.51 0.68
Austria 27.47 31.79 32.33 35.29 31.64 4.17
Belgium 39.01 42.73 42.15 40.38 35.03 -3.98
Canada 23.53 30.83 25.59 21.32 19.54 -3.99
Chile 15.1 17.98 17.55 20.71 18.46 3.36
Czech Republic 32.06 39.18 40.56 39.8 39.39 7.33
Denmark 30.13 26.23 32.01 33.93 32.01 1.88
Estonia 37.18 50.06 47.91 38.21 33.22 -3.96
Finland 26.79 31.56 34.13 36.7 33.78 6.99
France 17.84 24.47 24.82 27.25 24.75 6.91
Germany 18.69 24.4 25.61 27.81 26.64 7.95
Greece 13.25 25.34 23.99 25.84 23.15 9.9
Hungary 26.58 46.19 49.06 45.01 39.91 13.34
Iceland 33.21 37.15 38.88 35.67 36.55 3.34
Ireland 38.39 50.56 46.95 45.62 42.31 3.93
Israel 28.6 33.76 37.95 34.91 30.59 1.99
Italy 21.87 25.33 27.12 22.81 20.08 -1.79
Japan 6.85 9.91 13.75 19.35 14.79 7.95
Korea 23.71 32.93 37.72 43.42 40.64 16.93
Luxembourg 42.87 55.68 57.14 59.5 58.89 16.02
Mexico 26.54 31.82 30.73 30.64 30.33 3.79
Netherlands 34.71 38.19 34.41 36.65 35.91 1.2
New Zealand 17.36 20.18 19.61 21.42 18.41 1.05
Norway 19.29 14.72 14.48 14.77 15.3 -3.98
Poland 15.42 23.33 30.67 30.59 27.89 12.46
Portugal 28.92 27.13 26.4 35.45 32.41 3.49
Slovak Republic 35.64 48.27 47.97 48.4 44.35 8.71
Slovenia 30.68 37.52 41.1 39 34.4 3.72
Spain 20.59 27.01 27.77 24.94 20.73 0.14
Sweden 27.79 31.62 32.82 35 33.62 5.83
Switzerland 23.17 27.81 29.33 30.36 28.47 5.3
Turkey 11.2 15.3 20.81 26.28 21.79 10.59
United Kingdom 20.72 18.37 20.25 18.88 17.31 -3.41
United States 8.36 9.17 11.69 14.61 11.29 2.93
Avg. Of OECD 24.57 30 31.07 31.6 29 4.43
Brazil 9.7 11.46 13.01 11.49 9.03 -0.67
China 11.87 18.81 36.38 33.27 32.63 20.77
India 9.65 12.78 19.51 23.72 21.92 12.28
Indonesia 14.71 19.32 17.82 17.42 14.41 -0.29
Russian Federation 10.67 12.51 8.18 7.4 6.89 -3.77
South Africa 11.75 16.14 16.58 21.1 16.49 4.74
Avg. Of BRIICS 11.39 15.17 18.58 19.07 16.9 5.51
Source: Authors Calculation from OECD Tiva June 2015

Table 1.6: Forward Integration Index of OECD and BRIICS
Country 1995 2000 2005 2008 2009 Change of over 1995
Australia 21.81 26.09 31.39 35.1 31.3 9.49
Austria 20.9 24.01 25.71 24.1 24.21 3.31
Belgium 18.31 19.77 23.39 22.39 22.59 4.28
Canada 9.64 10.09 12.78 16.93 15.23 5.59
Chile 22.82 25.25 33.75 36.53 33.75 10.93
Czech Republic 19.42 22.16 24.49 23.19 22.98 3.56
Denmark 14.97 18.97 21.9 21.06 18.96 3.99
Estonia 15.35 18.65 19.86 20.89 21.29 5.94
Finland 22.91 24.62 25.39 23.98 22.51 -0.4
France 21.93 22.61 23.77 21.78 21.13 -0.79
Germany 22.59 24.39 25.08 24.12 22.84 0.24
Greece 17.57 19.54 18.36 21.59 19.86 2.28
Hungary 15.19 17.18 19.8 17.76 16.7 1.52
Iceland 10.13 17.36 15.91 21.17 18.68 8.55
Ireland 13.04 16.05 20.25 18.23 18.79 5.75
Israel 14.2 19.11 19.32 19.14 20.2 6
Italy 16.79 20.24 22.14 22.49 21.69 4.89
Japan 22.42 26.09 29.64 30.7 32.95 10.54
Korea 14.22 19.13 26.22 24.98 24.39 10.17
Luxembourg 16.95 14.34 15.44 15.15 12.76 -4.19
Mexico 10.32 9.33 9.95 14.02 11.46 1.14
Netherlands 18.09 20.58 24.15 22.97 20.85 2.76
New Zealand 13.27 15.39 14.75 19.51 15.69 2.42
Norway 30.14 37.44 44.79 44.39 38.84 8.7
Poland 17.47 24.05 24.62 21.6 20.45 2.98
Portugal 15.35 20.19 17.95 20.75 19 3.65
Slovak Republic 20.72 21.23 22.65 19.12 17.88 -2.84
Slovenia 14.68 20.64 19.31 18.26 18.22 3.54
Spain 19.68 20.37 21.98 20.57 21.13 1.44
Sweden 21.9 23.17 23.9 23.5 22.07 0.17
Switzerland 19.6 21.32 23.71 24.66 23.99 4.38
Turkey 13.48 18.59 15.59 16.59 15.94 2.45
United Kingdom 21.8 28.15 27.96 26.33 25.09 3.29
United States 24.51 31.05 31.75 29.67 28.54 4.03
612.2 717.16 777.68 783.23 741.96 129.76
Avg. Of OECD 18.01 21.09 22.87 23.04 21.82 3.82
Brazil 21.6 23.11 26.79 29.21 27.17 5.58
China 13.86 13.75 12.25 14.35 13.43 -0.43
India 14.24 19.06 23.27 22.34 20.35 6.11
Indonesia 18.81 23.66 31.4 31.82 29.31 10.5
Russian Federation 33.34 38.77 49.29 50.96 44.93 11.59
South Africa 31.51 31.99 16.08 15.75 17.33 -14.18
Avg. Of BRIICS 22.23 25.06 26.51 27.41 25.42 3.2
Source: Authors Calculation from OECD Tiva June 2015

Table 1.7: Share(%) of Domestic Value Added by Services in Gross Exports of OECD and BRIICS
Country 1995 2000 2005 2008 2009 2010 2011 Change over 1995
Australia 42.52 42.06 41.61 40.87 43.23 40.68 40.17 -2.35
Austria 46.6 43.73 43.46 42.68 45.7 43.99 43.34 -3.26
Belgium 39.73 40.82 45.52 43.79 49.8 49.85 46.71 6.98
Canada 32.73 32.18 34.26 32.91 37.33 35.77 34.6 1.87
Chile 37.07 35.38 32.57 28.51 29.83 28.53 28.36 -8.71
Czech Republic 34.64 29.76 26.16 27.27 28.7 27.48 26.69 -7.95
Denmark 43.6 42.75 44.09 41.89 45.7 46.76 44.4 0.8
Estonia 36.87 34.8 36.6 44.22 48.09 42.65 40.83 3.96
Finland 30.87 29.64 32.39 34.03 39.64 37.38 36.89 6.02
France 47.26 45.82 48.54 49.75 52.69 51.15 50.7 3.44
Germany 41.36 40.81 40.6 39.01 42.48 39 37.92 -3.44
Greece 51.01 52.03 57.35 55.01 57.18 55.92 53.52 2.51
Hungary 37.6 24.81 26.72 28.46 30.17 27.01 27.19 -10.41
Iceland 39.04 40.63 43.37 39.92 40.72 38.96 38.71 -0.33
Ireland 25.09 26.11 35 35.23 34.88 34.5 33.64 8.55
Israel 47.56 50.54 48.49 47.6 49.26 49.02 48.33 0.77
Italy 44.64 44.94 45.47 42.56 45.93 43.38 42.83 -1.81
Japan 48.56 46.96 46.3 44.83 47.85 43.88 44.14 -4.42
Korea 38.57 33.53 30.14 27.47 28.53 26.5 25.1 -13.47
Luxembourg 46.08 39.23 39.2 36.13 40.52 38.7 36.83 -9.25
Mexico 31.62 27.75 28.41 25.21 26.59 25.19 25.07 -6.55
Netherlands 45.12 50.58 54.84 52.35 57.19 54.9 54.53 9.41
New Zealand 44.88 42.59 52.69 48.53 51.46 50.05 49.26 4.38
Norway 34.83 29.93 29.42 28.15 31.93 31.75 29.25 -5.58
Poland 38.99 41.88 37.98 37.93 39.52 38.02 36.9 -2.09
Portugal 39.51 39.5 40.71 41.52 46.1 43.25 42.72 3.21
Slovak Rep. 33.46 27.35 24.77 25.91 30.28 27.67 26.91 -6.55
Slovenia 31.39 30.02 31.16 35 39.17 37.12 35.66 4.27
Spain 45.35 43.38 45.54 46.12 51.17 47.72 46.41 1.06
Sweden 36.52 38.77 41.3 41.79 45.23 42.79 43.43 6.91
Switzerland 48.67 48.77 45.53 48.93 51.54 50.67 50.46 1.79
Turkey 48.42 51.67 46.07 42.38 45.36 43.5 42.95 -5.47
UK 44.04 48.65 55.15 54.56 56.7 53.31 51.81 7.77
United States 48.28 49.95 51.36 49.32 53.03 51.07 49.56 1.28
Avg. Of OECD 40.66 39.62 40.66 39.99 43.04 41.12 40.17 -0.49
Brazil 47.98 43.5 41.87 43 45.74 44.92 43.97 -4.01
PR China 26.63 23.51 24.22 26.49 28.47 27.76 27.59 0.96
India 44.5 49.05 50.01 47.1 48.89 47.41 47.46 2.96
Indonesia 33.91 25.25 25.26 23.52 24.48 24.29 24.17 -9.74
Russia 37.79 36.16 36.56 36.8 37.64 37.89 35.64 -2.15
South Africa 38.69 38.74 41.31 36.27 39.35 38.66 37.64 -1.05
Avg. Of BRIICS 38.25 36.03 36.53 35.53 37.42 36.82 36.07 -2.17
Source: Authors Calculation from OECD Tiva June 2015
Table 1.8:Share (%) of Foreign Value Added by Services in Gross Exports of OECD and BRIICS
Country 1995 2000 2005 2008 2009 2010 2011 Change over 1995
Australia 5.92 6.45 5.53 5.78 5.69 5.35 5.66 -0.26
Austria 10.89 11.92 12.94 13.03 12.15 12.54 13.09 2.2
Belgium 15.88 18.08 17.29 19.76 18.08 18.1 18.73 2.85
Canada 10.51 11.78 10.25 9.91 10.26 10.26 10.06 -0.45
Chile 6.81 7.9 6.66 8.31 7.17 7.1 7.58 0.77
Czech Republic 14 17.57 19.52 19.77 19.43 20.36 21.13 7.13
Denmark 13.57 16.26 17.88 22.08 20.98 19.31 20.59 7.02
Estonia 18.2 22.64 22.6 18.29 16.69 18.12 19.41 1.21
Finland 11.94 14.99 16.34 17.57 17.03 17.04 17.63 5.69
France 8.27 10.41 11.01 11.42 10.45 11.18 11.62 3.35
Germany 7.27 10.19 10.86 12.31 11.52 11.98 12.79 5.52
Greece 7.07 10.74 10.3 12.35 10.51 10.88 11.22 4.15
Hungary 15.42 24.84 23.1 22.78 22.92 23.75 23.87 8.45
Iceland 8.79 13.09 17.63 16.67 18.12 17.98 19.18 10.39
Ireland 20.68 29.27 31 32.36 32.6 33.78 33.37 12.69
Israel 10.99 10.67 13.35 12.98 11.37 11.42 12.11 1.12
Italy 8.4 9.51 10.54 11.75 10.44 11.61 12.06 3.66
Japan 2.57 3.23 4.43 5.83 4.52 4.95 5.45 2.88
Korea 9.54 12.01 12.91 15.94 15.39 15.12 14.87 5.33
Luxembourg 29.56 42.91 44.31 48.28 46.74 48.28 48.93 19.37
Mexico 10.75 14.26 13.51 13.09 13.86 13.85 12.67 1.92
Netherlands 12.68 12.88 12.37 11.9 12.28 12.76 13.11 0.43
New Zealand 9.6 10.11 7.93 8.68 7.41 7.78 7.89 -1.71
Norway 11.01 9.18 9.05 9.15 10.2 10.05 9.67 -1.34
Poland 7.33 11.43 13.11 14.61 13.36 14.95 15.3 7.97
Portugal 12.46 12.88 13.96 14.73 13.65 14.13 14.54 2.08
Slovak Republic 14.67 20.25 20.55 20.98 19.94 19.69 19.92 5.25
Slovenia 14.98 16.99 17.87 17.74 15.87 16.88 17.64 2.66
Spain 8.84 12.31 12.66 12.93 11.31 11.99 12.58 3.74
Sweden 13.26 15.41 15.46 17.14 16.36 15.59 15.5 2.24
Switzerland 8.23 10.14 12.86 11.58 11.56 11.55 11.61 3.38
Turkey 3.72 5.76 8.78 10.01 9.44 9.51 10.74 7.02
UK 9.05 9.37 9.02 9.96 10.24 10.87 11.43 2.38
United States 5.02 5.43 5.38 6.04 5 5.49 5.88 0.86
Avg. Of OECD 11.11 13.84 14.44 15.16 14.48 14.82 15.23
Brazil 3.55 5.09 4.92 4.49 4.51 4.65 4.77 4.11
PR China 16.81 17.47 17 14.37 14.48 14.34 14.23 1.22
India 3.74 4.28 6.95 7.59 8.05 8.34 9.73 -2.58
Indonesia 6.08 7.65 7.04 5.49 4.66 4.55 4.68 5.99
Russia 6.1 7.47 6.33 6.53 6.3 6.38 6.59 -1.4
South Africa 5.74 7.22 8.08 8.68 7.2 7.24 7.08 0.49
Avg. Of BRIICS 7.00 8.19 8.38 7.85 7.53 7.58 7.84 1.34
Source: Authors Calculation from OECD Tiva June 2015

Domestic and Foreign Value Added Content of Services in Gross Exports
Share of services cannot be ignored in value added trade as right from the start of the idea generation of the product, till it reaches the final customer services have very important role to play. Comparing the average value of OECD and BRICS countries with respect to domestic services, value added share of gross exports not much changes have taken place and the average value for both the groups have remained constant. The latest figure for 2011 shows that average share of services stand at 40.17% and 36% for OECD and BRICS countries respectively (Table 1.7). For The Netherlands, Greece and United Kingdom, the domestic share of services stand at 54.53%, 53.52% and 51.81% respectively. Among BRICS countries, the maximum contribution of services is for India followed by Brazil and South Africa with 47.46%, 43.975 and 37.645 respectively. The share of foreign services value added in gross exports results shows (Table 1.8) that for OECD counties there is some increase in share from 11.22% in 1995 to 15.23% in 2011, but for BRICS countries the average value has remain constant at around 7%. Among OECD countries, the top slot is held by Luxembourg followed by Ireland and Czech Republic with their share standing at 48.93%, 33.37% and21.13% respectively.
Industry and Country wise Domestic and Foreign Value Added Content of Services in Gross Exports (2011)
Domestic value added share of services are shown in Table 1.9 for OECD (Avg.) and BRICS countries for the year 2011. Among BRICS, countries, the highest content of domestic services are for India followed by Brazil and South Africa, although China is the largest exporter in the world market but the contribution made by domestic services to gross exports is very low (27.59%). The average of OECD for domestic services content in gross exports is 42.23, which is lower than the share of services contribution of India and Brazil. On the basis of industry wise contribution made by services in gross exports, one can see that in agriculture the maximum contribution is made by services in the gross exports of South Africa followed by Brazil and Russia and for large economies such as China and India services contribution is very small. In manufactured goods, Brazil (31.77%) attains the top slot followed by Russia (28.13%) and South Africa (27.72%). In the business sector services also the top position is held by Brazil (88.27%) followed by South Africa (84.91%) and Indonesia (79.83%). For community, social and personal services, the maximum contribution is made by South Africa (86.94%) followed by India (86.31%) and Brazil (83.31%).

Table1.9: Domestic Value Added Share (%) of Services (Industry wise) in Gross Exports of OECD (Avg.) and BRIICS for 2011
Industry OECD BRIICS
Brazil China India Indonesia Russia South Africa
CTOTAL: TOTAL 42.23 43.97 27.59 47.46 24.17 35.64 37.64
C01T05: Agriculture, hunting, forestry and fishing 22.81 17.41 8.52 6.47 5.62 17.35 27.89
C10T14: Mining and quarrying 13.79 29.68 10.44 6.81 3.25 14.1 20.57
C15T37: Total Manufactures 22.65 31.77 13.33 20.88 13.46 28.13 27.72
C15T16: Food products, beverages and tobacco 29.81 33.77 13.42 25.94 13.3 28.2 34.41
C17T19: Textiles, textile products, leather and footwear 27.26 31.65 18.4 33.01 18.03 26.14 42.25
C20T22: Wood, paper, paper products, printing and publishing 27.86 29.32 11.36 24.15 15.44 25.38 36.19
C20: Wood and products of wood and cork 26.17 27.82 10.7 25.49 15.04 25.01 35.08
C21T22: Pulp, paper, paper prod-ucts, printing and publishing 28.23 29.7 11.83 24.04 15.67 25.89 36.51
C23T26: Chemicals and non-metallic mineral products 23.16 34.09 12.29 14.18 11.13 27.61 28.22
C23: Coke, refined petroleum products and nuclear fuel 15.17 32.25 9.35 9.84 4.04 29.13 21.64
C24: Chemicals and chemical products 26.34 35.39 13.09 19.91 11.77 23.6 36.75
C25: Rubber and plastics products 23.59 31.33 11.81 21.2 18.31 26.74 32.63
C26: Other non-metallic mineral products 24.79 30.22 12.94 16.54 11.47 29.18 24.14
C27T28: Basic metals and fabricat-ed metal products 20.47 27.12 13.47 14.18 10.28 30.92 23.25
C27: Basic metals 20.89 27.74 15.78 13.34 9.87 30.96 23.01
C28: Fabricated metal products 19.47 22.72 10.64 16.64 13.67 29.94 25.54
C29: Machinery and equipment, nec 20.75 27.51 14.34 16.76 12.8 21.56 27.43
C30T33: Electrical and optical equipment 19.89 31.55 11.36 21.99 16.65 20.74 28.59
C30T33X: Computer, Electronic and optical equipment 19.6 34.52 11.26 24.69 17.25 20.12 28.07
C31: Electrical machinery and apparatus, nec 20.63 28.91 11.78 18.86 15.45 23.61 28.98
C34T35: Transport equipment 22.17 33.56 12.8 19.82 10.93 24.02 30.51
C34: Motor vehicles, trailers and semi-trailers 22.37 35.02 12.4 20.63 11.19 28.55 30.7
C35: Other transport equipment 21.67 29.95 13.1 18.97 10.58 22.12 28.54
C36T37: Manufacturing nec; recy-cling 24.84 24.86 16.38 33.46 16.52 25.77 30.41
C40T41: Electricity, gas and water supply 21.97 24.93 20.3 14.78 8.37 30.59 12.29
C45: Construction 67.9 73.33 48.52 57.87 51.26 67.72 65.29
C50T74: Total Business Sector Services 81.14 88.27 76.45 79.69 79.83 78.98 84.91
C50T55: Wholesale and retail trade; Hotels and restaurants 82.7 91.74 82.97 89.71 82.68 82.06 84.38
C50T52: Wholesale and retail trade; repairs 83.69 92.33 84.67 94.45 86.11 82.33 85.66
C55: Hotels and restaurants 76.88 78.79 58.35 52.22 58.14 76.51 79.29
C60T64: Transport and storage, post and telecommunication 75.47 78.6 69.1 67.63 66.5 69.64 82.83
C60T63: Transport and storage 75.04 77.81 68.09 67.36 62.68 69.11 83.92
C64: Post and telecommunications 79.95 88.09 78.7 70.2 92.55 79.26 78.42
C65T67: Financial intermediation 82.32 92.98 87.54 90.23 90.35 86.95 95.93
C70T74: Real estate, renting and business activities 84.26 87.3 57.38 80.56 83.31 85.66 84.41
C70: Real estate activities 92.87 98.16 81.01 97.67 92.67 84.17 87.19
C71: Renting of machinery and equipment 83.93 81.2 57.43 88.58 78.93 86.78 83.82
C72: Computer and related activi-ties 76.58 88.21 55.5 89.11 77.18 80.15 84.14
C73T74: R&D and other business activities 85.75 86.99 56.53 73.86 79.46 80.12 81.57
C75T95: Community, social and personal services 84.51 83.31 67.86 86.31 67.11 80.38 86.94
C75: Public administration and defence; compulsory social security 84.31 89.78 .. 77.97 77.97
C80: Education 91.4 92.55 78.61 95.78 75.49 87.35 83.66
C85: Health and social work 86.66 85.9 59.96 76.23 59.18 82.98 78.45
C90T93: Other community, social and personal services 83.37 80 68.19 86.38 66.23 79.94 88.12
C10T41: Memorandum item: Industry (Mining, Manufactures and Utilities) 22.06 31.16 13.32 20.48 9.53 22.63 25.08
C45T95: Memorandum item: Total Services including Construction activities 81.16 87.87 75.74 80.15 78.96 78.6 84.95
C50T95: Memorandum item: Total Services 81.34 88.05 76.11 80.47 79.35 79 84.99
C50T64: Memorandum item: Wholesale, retail, hotels, restaurants, transport 79.81 88.58 79.69 78.94 79.52 78.62 83.85
C65T74: Memorandum item: Finance, Real Estate and business services 83.56 87.65 58.08 81.08 84.5 86.06 90.75
Source: Authors calculation using OECD Tiva June 2015

Foreign value added share of services in gross exports are shown in Table 1.10 for OECD (Avg.) and BRICS countries for the year 2011. Among BRICS countries, foreign services contributed most to the gross exports of China (14.23%), it is higher than the average of OECD (11.83%), followed by India (9.73%) and South Africa (7.08%). Industry wise comparison shows that the contribution of foreign services to manufacturing sector is maximum for China (17.79%) followed by India (12.03%) and South Africa (8.94). In the manufacturing sector services, contribution is as high as 24.84% for electrical and optical equipment (China) followed by electrical machinery and apparatus at 21.05% (China), wood and paper at 20.26% (China). In business sectors services foreign services, the share is not high and services contributed most to India (6.74%) followed by Russia (5.39%) and South Africa (4.34%).

Table1.10: Share (%) of Foreign Value Added Content of Services (Industry wise) in Gross Exports of
Industry OECD Brazil China India Indo-nesia Russia South Africa
CTOTAL: TOTAL 11.83 4.77 14.23 9.73 4.68 6.59 7.08
C01T05: Agriculture, hunting, forestry and fishing 8.08 4.22 4.36 2.03 2.38 5.51 8.93
C10T14: Mining and quarrying 4.66 4.61 10.66 3.81 1.36 3.23 5.8
C15T37: Total Manufactures 14.24 5.97 17.79 12.93 7.2 9.34 8.94
C15T16: Food products, beverages and tobacco 12.51 4.7 11.64 6.63 3.91 8.11 7.42
C17T19: Textiles, textile products, leather and foot-wear 15.25 4.42 13.29 10.73 8.27 13.48 10.89
C20T22: Wood, paper, paper products, printing and publishing 10.83 4.68 20.02 11.45 7.53 9.64 8.82
C20: Wood and products of wood and cork 11.93 4.77 19.69 9.48 5.46 9.5 8.18
C21T22: Pulp, paper, paper products, printing and publishing 10.58 4.66 20.26 11.62 8.7 9.84 9
C23T26: Chemicals and non-metallic min-eral products 14.69 6.66 16.67 11.29 5.59 7.78 8.85
C23: Coke, refined petroleum products and nuclear fuel 14.61 6.52 13.91 10.79 1.94 6.06 7.39
C24: Chemicals and chemical products 14.99 6.9 18.71 12.2 6.17 12.06 10.86
C25: Rubber and plastics products 15.08 6.38 17.62 11.91 8.65 13.67 8.96
C26: Other non-metallic mineral products 10.97 4.94 10.73 8.55 4.99 9.08 7.13
C27T28: Basic metals and fabricated metal products 14.36 5.49 11.35 13.43 6.54 10.26 7.53
C27: Basic metals 15.08 5.59 9.92 13.5 6.06 10.27 7.59
C28: Fabricated metal products 12.64 4.8 13.09 13.23 10.45 9.93 6.99
C29: Machinery and equipment, nec 12.34 6.34 12.66 13.48 15.14 12.36 10.12
C30T33: Electrical and optical equipment 14.64 8.54 24.84 14.25 12.1 11.89 12.29
C30T33X: Computer, Electronic and opti-cal equipment 14.63 10.9 25.7 14.71 12.55 11.53 14.06
C31: Electrical machinery and apparatus, nec 14.66 6.43 21.05 13.7 11.19 13.53 10.98
C34T35: Transport equipment 15.86 8.07 12.8 13.19 9.93 13.77 11.19
C34: Motor vehicles, trailers and semi-trailers 16.89 8.38 14.63 13.5 10.79 16.36 10.65
C35: Other transport equipment 13.33 7.3 11.43 12.86 8.76 12.68 16.62
C36T37: Manufacturing nec; recycling 12.48 3.8 9.75 21.54 7.79 9.52 8.33
C40T41: Electricity, gas and water supply 10.28 2.69 3.52 7.89 6.81 6.93 3.81
C45: Construction 10.74 3.66 4.5 9.87 8.57 8.23 7.59
C50T74: Total Business Sector Services 8.91 2.66 2.66 6.74 4.23 5.39 4.34
C50T55: Wholesale and retail trade; Hotels and restaurants 6.76 2.02 1.91 2.5 3.62 4.86 4.21
C50T52: Wholesale and retail trade; repairs 6.73 1.95 1.89 2.09 3.62 4.79 4.04
C55: Hotels and restaurants 6.93 3.44 2.21 5.77 3.66 6.37 4.85
C60T64: Transport and storage, post and telecommunication 10.29 4.68 3.31 7.95 6.75 7.04 5.11
C60T63: Transport and storage 10.29 4.77 3.35 7.84 7.39 7.19 4.85
C64: Post and telecommunications 10.36 3.69 2.92 9.04 2.42 4.34 6.14
C65T67: Financial intermediation 13.05 2.29 1.63 3.22 4.08 3.93 2.24
C70T74: Real estate, renting and business activities 8.68 2.69 5.12 10.07 4.27 3.84 4.82
C70: Real estate activities 2.73 0.38 2.24 0.89 1.79 2.85 3.28
C71: Renting of machinery and equipment 8.33 3.68 5.11 5.98 5.46 3.65 5
C72: Computer and related activities 15.77 3.8 5.34 5.09 5.98 5.69 7.19
C73T74: R&D and other business activities 7.27 2.8 5.23 13.96 5.24 5.34 5.15
C75T95: Community, social and personal services 6.47 3.25 3.18 6.36 6.88 5.37 3.41
C75: Public administration and defense; compulsory social security 4.86 2.47 .. 4.64 6.18
C80: Education 2.6 1.93 2.16 1.51 5.34 3.46 4.44
C85: Health and social work 4.92 3.78 3.75 5.81 5.46 4.66 5.99
C90T93: Other community, social and personal services 7.43 3.46 3.16 6.39 7.21 5.49 3.05
C10T41: Memorandum item: Industry (Mining, Manufactures and Utilities) 13.56 5.57 17.75 12.67 4.95 6.94 7.78
C45T95: Memorandum item: Total Services including Construction activities 8.79 2.7 2.71 6.74 4.39 5.49 4.31
C50T95: Memorandum item: Total Services 8.76 2.69 2.68 6.69 4.33 5.39 4.31
C50T64: Memorandum item: Wholesale, retail, hotels, restaurants, transport 8.17 2.66 2.24 5.16 4.23 5.47 4.51
C65T74: Memorandum item: Finance, Real Estate and business services 10.26 2.67 5.04 9.7 4.24 3.87 3.4
Source: Authors calculation using OECD Tiva June 2015

In the business sector services, computer and related activities have the maximum share of 15.77% followed by Financial Intermediation (13.05%) and post and telecommunications (10.36%) for OECD. For BRICS countries, R&D and other business activities are the major contributors with 13.96% share followed by real estate, renting and business activities (10.07%) and transport and storage, post and telecommunication (7.95%).
Origin of Value Added in OECD and BRICS Countries Exports
On comparing the share of value added by OECD and BRICS countries in each other's exports, it can be seen in Table 1.11 that overall share of BRICS countries in value added to total gross exports of OECD member countries have increased from 1% in 1995 to 4.44% in 2011, thereby increasing by almost 3.43% over a period of 17 years. The share of China and Russia increased by 1.77% and 84% over the same period and on the other hand domestic value added content in the exports have decreased from 96.94% to 89.99 % for the same period.

Table 1.11a: Change in Origin of Value Added in Exports (%) of OECD and BRIICS(1995)
Origin of Value Added OECD Brazil China India Indonesia Russia South Africa
OECD: 96.94 5.37 22.63 5.03 8.91 9.64 9.70
Brazil: 0.13 92.19 0.21 0.05 0.10 0.06 0.10
China: 0.22 0.04 66.65 0.13 0.25 0.15 0.12
India : 0.07 0.02 0.14 90.66 0.12 0.15 0.07
Indonesia: 0.16 0.03 0.59 0.12 87.48 0.04 0.04
Russia: 0.33 0.06 1.20 0.31 0.15 86.78 0.07
South Africa: 0.11 0.08 0.17 0.12 0.03 0.04 86.88
Total of EME*: 1.00 0.23 2.30 0.73 0.66 0.43 0.39

Table 1.11b: Change in Origin of Value Added in Exports (%) of OECD and BRIICS(2011)
Origin of Value Added OECD Brazil China India Indonesia Russia South Africa
OECD: 89.99 5.85 19.12 8.73 4.31 8.99 7.56
Brazil: 0.34 89.26 0.71 0.39 0.18 0.11 0.21
China: 1.98 0.81 67.89 2.03 1.25 1.39 1.33
India : 0.40 0.33 0.65 76.01 0.40 0.19 0.66
Indonesia: 0.39 0.09 0.65 0.63 88.02 0.07 0.13
Russia: 1.17 0.23 0.91 0.45 0.31 86.28 0.24
South Africa: 0.16 0.06 0.31 0.39 0.06 0.06 80.55
Total of EME*: 4.44 1.50 3.23 3.89 2.20 1.82 2.57
* Denotes the share that emerging market economies contribute to the gross exports of country/group under study.
Source: Authors Calculation from OECD Tiva June 2015

On comparing contribution made by emerging market economies to gross exports of the country/group, value added content in exports by BRICS countries, China, Indonesia, Russia and South Africa have registered a fall in the share of OECD member countries share in value added exports and among them China registered a maximum reduction of around 3%. For Brazil, the share of OECD member countries have remain constant whereas for India the share of OECD member countries have increased from 5.03% to 8.73% for the same period.
Coming to the contribution made by EME to the gross exports of the coun-try/group, it can be seen that EME’s contribution has increased from 1995 level for all the countries under study plus OECD member countries. The Maximum increase happens to OECD countries (3.43%) followed by India (3.17%) and South Africa (2.17). China is the only country, which has registered the lowest increase over the period under study and at the same time share of OECD countries has also decreased from its 1995 level.
Factors affecting Country Participation in GVCs: Model based investigation
Factors affecting country participation in GVCs is affected by a large number of factors whether internal or external to the economy. These factors range from core policy factors to economic and yet more factors may be categorised under non-policy factors that do not directly affect participation but facilitate a country to improve its place in GVCs.
GVC participation of a country is mainly measured by forward and the backward integration. Backward participation is the foreign value added content in a country's gross exports whereas the forwards participation is the domestic value added destined in processing and exports by other countries to the gross exports of the nations. In this paper, the OECD TIVA June 2015 database does not have the latest value of the country participation in GVCs therefore the backward participation is measured by foreign value added content in gross exports of the country for 2011 which is the latest year and for forward participation the index value for the year 2009 are taken from OECD Tiva May 2009 database. To find out the factor that affect a country's forward and backward participation simple linear regression is run with following independent variables- GDP, FDI inflows, tariff charged and tariff faced, cost to import, quality of port, manufacturing value added as per cent of GDP and services value added as the per cent of GDP, liner shipment and open to multilateral trade rules. Data sources for the above variable except for GDP (WDI) is Enabling Global Trade Report 2012.
On running the simple regression, the results (Table 1.12) that are arrived are in consonance with the previous work done in the field but the difference lies in the variable selected on the right side of the equation, the result achieved by Kowalski were that 57.8% variation caused in the backward participation was explained by the variable selected for his work. I have achieved 70% of the variation caused in the backward participation is caused by the variable selected for the study, the remaining 30% is missing for the model because of the non selection of NTM and other trade facilitation measures. If these two are also included then this would more than 85%.
Going for the forward participation, the results are not satisfactory and the selected factors account for 45.05% variation in the forward participation. For forward participation, the factors that are selected are the same with inclusion of cost to export. On running the simple regression, it has been found that except for GDP, tariff faced, cost to import and openness to trade, all other factors selected have the negative impact of countries forward participation.

Table 1.12: Regression Results Overall(OECD & BRIICS)
Backward Integration (2011) coef. Forward Integration (2009) coef.
Gdp -0.00314 0.000784
fdi_inf 0.000148 -1.60E-05
tariff_charged -0.23333 -0.23089
tariff_faced 1.838069 0.463746
cost_ex Not Included -0.00549
cost_imp -0.00185 0.001138
Oppeness 0.262543 0.140517
Liner -0.04902 -0.019
Mnuvad 1.111375 -0.31018
Servad 0.31155 -0.00532
_cons -36.0754 14.27131
R-squared 0.708 0.4505
Adj R-Squared 0.5985 0.2116
Source: Authors Calculation

Based on the regression results, it has been found that the larger the size of the home market the lower is the GVCs backward participation and this has been made clear from the result that are shown in Table 1.3 which shows that top slots in the FVA content in gross exports occurred to Luxembourg but the GDP is US $55.2 Million and the US which has the highest GDP only has FVA content of around 15.58 apart from GDP. Secondly, the tariff charged on imports affects backward participation adversely in the sense that higher tariff will reduce the imports of the country which in turn will reduce FVA content. Thirdly, availability of liner shipment does not mean that a country’s imports will increase, this is evident from the fact that developed countries in comparison to developing countries have good quality ports and liner shipment but the FVA content in gross exports are lower than that of developing countries. The factors positively affecting the backward participation are FDI inflows, openness to multilateral trade policy, manufacturing and services value added as percentage of GDP.

Conclusion
This work has brought forth numerous issues and results for further research. This research has brought forward the importance of intermediate products in the gross exports and imports. Emerging markets especially India and Indonesia have registered a significant growth in the intermediate products share in gross exports and imports. What is required now is to have the policies specifically dealing with the trade of intermediate products. Looking at the content of domestic value added in gross exports, both OECD and BRICS have registered a decrease in their share but more reduction occurred to OECD countries. On the other hand, foreign value added content in gross exports have increased for both OECD and BRICS countries but they are more for OECD countries. The issue that they have brought is how to design the trade policy with increasing share of foreign content and finding out the reason why the domestic value added content in gross exports have registered a reduction.
Secondly, the participation index for OECD and BRICS countries have seen the same trend in backward integration but for the forward integration the relation is reverse. The value of backward integration is more for smaller economies among OECD countries but the same is not true for BRICS countries. For forward index also smaller economies have higher values.
Thirdly, the share of services in domestic and foreign value added in gross exports shows that the domestic services contribute more to OECD than to BRICS countries and the foreign content of services in the gross exports for OECD has increased but for BRICS countries it had remained constant for the period under study. Industry wise comparisons show the wide variation in the domestic as well as foreign value added content of services in gross exports of OECD and BRICS.
Fourthly, the origin of value added in gross exports of OECD and BRICS countries shows that BRICS countries' contribution to the gross exports of OECD countries has increased but the opposite has happened to the share of OECD countries in the gross exports of BRICS countries. This has again brought forward the importance of BRICS in world trade and the special policy to be designed for them.
Finally, coming to the factors affecting the forward and backward integration of a country it has been observed that among policy factors, tariff, openness of the economy, FDI inflows and trade costs are the major affecting factors. Economy related factors such as GDP, contribution of manufacturing and services to GDP are also found to be affecting countries' participation in the GVCs.