# **Source:** Authors’ calculations using OECD/WTO TiVA.

The domestic value added expressed as a share of gross exports is very high in almost all sectors in Brazil, but particularly in agribusiness. There has been a decline in the share of exported value added in gross exports over time – for Brazil as well as most comparator countries across all four GVC‐intensive sectors – which is consistent with greater GVC participation (Appendix Figure A1). In GVCs, countries must import to export. But what ultimately matters is the ability of a country to leverage GVC participation to increase its domestically exported value added. And Figure 3 has highlighted that Brazil has seen robust increases in exported domestic value added in all sectors over time. Canada exhibits low shares across all four GVC‐intensive sectors.

Conversely, Brazil shows relatively low shares of foreign value added in exports as a share of gross exports, especially in agriculture. This may reflect low international participation in GVCs as a buyer across sectors, or being positioned upstream in the sector. The foreign value added embodied in gross exports captures the country’s GVC position as a user of foreign value‐added in its exports. For instance, worldwide this share is around 20% which means that one‐fifth of gross exports constitute value that was added in a foreign country. Overall, this share has over the years been increasing the fastest for emerging countries. In addition, it is expected to be somewhat lower for larger countries. As a reflection of Brazil’s high share of domestic value‐ added exports in gross exports, it shows relatively low levels of foreign value‐added in its gross exports (Appendix Figure A2). This is especially true for the agribusiness sector, where foreign value added represents 9.8% of gross export value in 2011. This has nonetheless increased, showing signs of increased GVC participation as a “buyer” of intermediate inputs which are processed domestically for Brazil’s exports. The foreign value‐added share in gross exports is highest for Brazil’s automotive sector, which has also substantially grown over the years to up to 19.9% in 2011. Both the metal and chemical sectors show a share of 15.8% in 2011.

All sectors, however, show a relatively low foreign value added share compared to peer countries. For instance, Brazil has the lowest share of foreign value added in gross agribusiness exports, and other countries including Turkey, Colombia and Argentina exhibit higher shares. This is particularly true for Canada (20.6%). Of note, foreign value‐added exports are important as they could indicate spill‐over effects or “learning” effects from foreign suppliers of which their inputs are processed further downstream in the value‐chain for exports. As such, there is ample scope for Brazil to further integrate in GVCs as a buyer in the four sectors in which it already exhibits high comparative advantage.

Brazil’s total domestic value added embodied in gross exports is generated directly by export‐ oriented sectors, as much as it is generated indirectly through domestic suppliers to exports. The importance of direct domestic value added has also been declining in Brazil. Domestic value added (embodied in gross exports) can be broken down into (a) value added produced within the industry itself (i.e. direct), (b) value added created in other domestic supplying sectors or industries (i.e. indirect), and finally (c) domestic value added which is re‐imported through intermediates. This indirect part is comprised of Brazil’s intermediate input production that is produced domestically, and is exported in other goods in which these intermediate inputs are embodied. It is interesting to note that Brazil’s direct export share of domestic value added embodied in exports is as large as its indirect exports share. Brazil has seen a slight decrease of 7