As a small open economy, Singapore is highly dependent on trade. There are two complementary ways to measure the importance of exports to the Singapore economy. The first is to measure the value-added (VA) generated from Singapore’s gross exports of goods and services to other countries, where gross exports refer to the total exports to a country regardless of whether they are meant to meet final or intermediate demand.
The second is to measure Singapore’s VA embodied in foreign exports.1 Specifically, Singapore’s VA would be embodied in foreign exports if Singapore was involved in the supply of intermediate goods or services further up the value chain in the production of these exports. For example, when Malaysia exports an electronics product to China, some of Singapore’s VA would be embodied in Malaysia’s exports because our sectors had provided intermediate goods and services to Malaysia’s electronics sector which produced the exported product.
As a significant share of Singapore’s goods and services exports are intermediates used by sectors overseas to produce the goods and services intended for export to another economy, it is pertinent to examine the second measure, alongside the first, to have a clearer understanding of how different export flows contribute to the Singapore economy.
Please click here for the full article.