Table 3.

Production sharing, trade, and international business cycles

(a) Univariate Regressions
$${\mathit{MftgVAcorr}}_{\mathit{ij}}=\alpha +\beta ({\mathit{trade}}_{\mathit{ij}})+{\epsilon }_t$$
where ${\mathit{MftgVAcorr}}_{\mathit{ij}}$ denotes bilateral manufacturing correlation between countries i and j and ${\mathit{trade}}_{\mathit{ij}}$ is a measure of the trading relationship between i and j described below
${\mathit{trade}}_{\mathit{ij}}$	$\left({\displaystyle \frac{{\mathit{affilsales}}_{\mathit{ij}}}{{\mathit{mftgVA}}_{\mathit{ij}}}}\right)$	$\left({\displaystyle \frac{{\mathit{affilsales}}_{\mathit{ij}}}{{\mathit{mftgEXP}}_j}}\right)$	$\left({\displaystyle \frac{{\mathit{mfgEXP}}_{\mathit{ij}}}{{\mathit{mftgVA}}_j}}\right)$
$\alpha$	0.177*** (0.0516)	0.087 (0.0720)	0.170*** (0.0616)
$\beta$	0.940** (0.4291)	0.850** (0.3679)	0.290* (0.1529)
$R^2$	0.177	0.247	0.115
(b) Multivariate regression
$${\mathit{mftgVAcorr}}_{\mathit{ij}}=\alpha +{\beta }_1\left(\frac{{\mathit{affilsales}}_{\mathit{ij}}}{{\mathit{mftgEXP}}_{\mathit{ij}}}\right)+{\beta }_2\left(\frac{{\mathit{mftgEXP}}_{\mathit{ij}}}{{\mathit{mftgVA}}_j}\right)+{\epsilon }_{\mathit{ij}}$$
$\alpha$	${\beta }_1$	${\beta }_2$	$R^2$
0.069 (0.0755)	0.746** (0.3636)	0.140 (0.0901)	0.247

where ${\mathit{affilsales}}_{\mathit{ij}}$ denotes affiliate sales to country i from country j, ${\mathit{mftgVA}}_i$ denoting manufacturing value added in country i, and ${\mathit{mftgEXP}}_{\mathit{ij}}$ denotes manufacturing exports to country i from j. *** indicates significance at the 1%, ** at the 5%, and * at 10%.

Sources: Data are annual from 1983 to 2003; affiliates trade data from BEA; exports to US data from OECD International Trade in Commodities database. Manufacturing value added correlations are computed by HP-filtering real annual manufacturing value added data from WDI, OECD, and BEA. The estimates include 33 country pairings with the US: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Costa Rica, Denmark, Dominican Republic, Finland, France, Germany, Greece, India, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Norway, Philippines, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, UK, and Venezuela. The results are roughly unchanged if we include the intra-European country pairings and are robust to the exclusion of outliers.