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Country A participates in the global value chain of a product for which the last stage of production is performed is in country D. Assume
Country A participates in the global value chain of a product for which the last stage of production is performed is in country D. Assume the following scenario: In a first round, country A exports an intermediate input worth $1 to country B. The receiving country B then processes that input, adds $2 in value, and then exports the good back to country A as an intermediate with value $3. In country A, this intermediate input is combined with other intermediate inputs imported from country C worth $3 and country A's domestic value added worth $4. The $10 intermediate input is sent to country D which performs the last stage of production. The final product is sold for $15 to customers all over the world. Calculate the value of exports of country A and the total value added produced in country A. Then, discuss based on this example why quantifying a country's degree of participation in a global value chain based on the value of exported intermediates leads to an overestimation of the country's true contribution to the global value chain
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