The purpose of this paper is to document for the first time the vertical specialization structure of the global pharmaceutical value chain.
The paper adopts Wang et al.’s (2013) gross exports decomposition method to trace foreign values in bilateral trade between major pharmaceutical producers, using the 2014 WIOT database.
The paper shows that as in other sectoral value chains, the pharmaceutical value chain is heavily regional. The paper identifies a strong European regional value chain, and a less intensive, Asian regional value chain. Korea is positioned in the middle of the Asian value chain, and is connected to the European regional value chain as a second-tier supplier.
The paper documents the vertical specialization structure of the global pharmaceutical value chain through gross exports decomposition method, making use of the World Input–Output Table Database 2014 which disaggregates pharmaceuticals in its industry classification for the first time.
