Metal intensity of use in the era of global value chains
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ORIGINAL PAPER
Metal intensity of use in the era of global value chains Zauresh Atakhanova 1 & Peter Howie 2 Received: 26 November 2018 / Accepted: 20 February 2019 # Springer-Verlag GmbH Germany, part of Springer Nature 2019
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. Keywords Intensity . Metals . Trade in value added . TiVA . China JEL codes Q31 . Q37 . O13 . O14 . F69 . L61
Introduction The intensity of use concept is used to analyze the nature of the relationship between metal consumption and aggregate income (Malenbaum 1978). It is commonly defined as the ratio of quantity of unwrought metal consumed to real GDP (Tilton 1989). Several studies have documented an inverted U shape of the graph plotting metal intensity of use against per capita real GDP levels (e.g., Radetzki and Tilton 1990; Lohani and Tilton 1993). Some studies refer to this plot and the Foreword This study is respectfully dedicated to John Tilton. * Peter Howie [email protected] Zauresh Atakhanova [email protected] 1
Academy of Public Administration of Kazakhstan, 33a Abay Avenue, Astana, Kazakhstan 010000
2
Graduate School of Public Policy, Nazarbayev University, 53 Kabanbay Batyr Avenue, Block C3, Astana, Kazakhstan 010000
associated relationship as the material Kuznets curve (e.g., Jaunky 2012). The rationale behind the relationship is the changing structure of national income. At low levels of income, rising economic activity is normally associated with industrialization, high levels of investment in physical capital, and increasing manufacturing output. This phase of economic development is accompanied by increasing intensity of metal use. As the income level continues rising, consumer preferences change and servi
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