The effective rate of protection also depends on the share of value added in the product price.
The share of value added by American non-financial firms that is spent on pay is 58%, its lowest since records began in 1929.
creates the biggest share of value added, as opposed to the manufacturing sector (Kaplinsky 2013).
Sectors such as textiles, chemicals, construction, and forestry only produce a small share of value added and contribute marginally to employment creation.
Although rail has always contributed a tiny proportion of value added in transportation, its share of value added continues to decline because road transport (freight and passenger) has virtually taken over all the traffic previously conveyed by rail.
Figure 1 further indicates that agriculture and trade sectors lie below the 45-degree line, meaning that the share of employment in these sectors is higher than the share of value added from these sectors.
In the example discussed throughout this paper, the treated unit is Germany which has been reunified in 1990, the variable of interest is GDP per capita, and predictors are (pre-treatment) GDP per capita, a measure for trade openness, the inflation rate, the industry share of value added, the amount of schooling attained, and the investment rate.
When measuring the effect of the 1990 reunification on Germany's GDP per capita using the software package R, Abadie et al. (2015) found the following predictor weights: 44.2% (GDP per capita), 24.5% (investment rate), 13.4% (trade openness), 10.7% (amount of schooling), 7.2% (inflation rate), and 0.1% (industry share of value added).
During the same period, emerging economies have increased their shares of valued added in manufacturing by 18%%.
Lower GDP shares of the value added in manufacturing have accompanied rising shares of employment in services (Figure 5). Figure 5 Global manufacturing and employment in services.
