Metal intensity of use in the era of global value chains

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.