Box 2: Value-Added Trade, Global Value Chains and Production Networks in Irish Exports.
By Michael O’Grady
Global trade faces substantial challenges in 2025, due to rising protectionism, economic fragmentation and trade disputes. Geopolitical tensions can reshape trade patterns, as countries prioritise resource security and align trade with strategic partners. Given the potential impacts of these factors on global trade flows, this Box presents an overview of Ireland’s positioning in Global Value Chains, its dependence on US imports for export-oriented production, and the main countries where Irish exports are finally absorbed.
Supply chains operate as systems of value addition, where each producer purchases inputs, adds value, and passes the goods or services to the next production stage. As part of these systems, Global Value Chains (GVCs) refer to the series of interconnected activities required to produce and deliver goods and services that span multiple countries. Each stage of the chain adds value to the final product, with individual stages often involving distinct locations, components and services. Since Covid-19 and the resulting supply chain issues that limited the availability of intermediate products, there has been renewed interest in decomposing the value added (VA) components of gross trade flows at both the country and country-sector levels.
The most basic decomposition splits the value-added content of exports into three segments: Domestic Value Added, Foreign Value Added, and Double Counting. Using the 2024 release of the OECD Inter-Country Input Output (ICIO) Tables, we estimate these values for Irish trade flows, and compare them to Ireland’s main trading partner economies (Figure 1).
Comparison of Gross Export Decompositions, Ireland and Selected Trading Partners
Percentage of total export value added

Source: Author’s calculations using the 2024 OECD ICIO release, based on data for 2019.
Notes: Columns showing export value-added are decomposed into domestic value added (navy), foreign value added (lime) and double counting (pink). At 46.9%, Irish exports have a larger share of foreign value added than any of the other trading partners shown.
Ireland is considerably more dependent on the use of foreign value-added content as an input into exports of goods and services than its key trading partners. This is due to the strong concentration of multinational enterprises (MNEs) in the Irish economy, and the international fragmentation of their production processes through global value chains.
GVC participation can be decomposed into two distinct components: backwards and forwards linkages. Backward GVC linkages represent the share of foreign value-added in total exports of a country. Similarly, forward GVC linkages represent the amount of domestic value-added embodied in exports that are further re-exported to other countries. We can generate a breakdown of GVC participation, using the decomposition method of Borin and Mancini (2023), as a share of total gross exports for Ireland and its main trading partners (Figure 2).
Global Value Chain Linkages as a Share of Gross Exports
Percentage of total export value added

Source: Author’s calculations using the 2024 OECD ICIO release, based on data for 2019. GVC linkages estimated using the decomposition of Borin and Mancini (2023).
Notes: Bar chart showing the structure of GVC linkages among Ireland and its main trading partners. Navy bars (LHS) represent backwards GVC linkage shares, while teal bars (RHS) represent forward GVC linkage shares.
Backwards GVC linkages account for almost half of the total amount of value added in Irish exports. In contrast, no other trading partner’s backwards GVC share exceeds 30 per cent. In contrast, Ireland’s forward GVC linkage share (10%) is lower than all other trading partners, suggesting that Ireland exports a high volume of finished products, or intermediates that eventually form part of final demand in the importing country and not part of further re-exports.
The effects of trade disruptions and exogenous trade shocks can vary considerably across sectors given their different extent of trade integration and GVC participation. Using the ICIO tables, we again generate the basic export flow decomposition, this time for the 12 most export intensive sectors in the Irish economy (Figure 3).
Sectoral Irish Export Value Added by Content
$ millions

Source: Author’s calculations based on the 2024 OECD ICIO release, using data for 2019. Values denominated in $ millions.
Notes: Column chart showing the structure of sectoral export value added. Largest 12 sectors account for 90.5% of total value added in gross exports.
The three largest exporting sectors (Computer Programming & Information services, Pharmaceutical Products and Financial & Insurance services) all rely heavily on imported intermediate goods and services, with a larger share of foreign VA content in their exports than domestic VA. Across these 12 sectors combined, foreign VA accounts for 47.5% of total gross exports.
We can decompose the components of Figure 3 using the approach of Borin and Mancini (2023) to obtain estimates of Ireland’s sectoral backwards and forwards linkages to global value chains (GVCs), presented as a share of gross sectoral exports (Figure 4). Again, Computer Programming & Information Services, Pharmaceutical Products, and Financial & Insurance Services (plus Air Transport) are the sectors most integrated in backwards GVCs, accounting for over 60% of total Irish backwards GVC participation. Administrative and Support services is the only sector that has a higher percentage share of export-value added linked to forward GVCs (24 per cent) than to backward GVCs (19 per cent).
Irish Sectoral GVC-related Trade Shares
Percentage share of value added in sectoral exports

Source: Author’s calculations based on the 2024 OECD ICIO release.
Notes: Column chart showing the sectoral participation in GVCs. Values denominates as a share of sectoral value added in gross exports. The 12 largest sectors account for 91.2% of total backward GVC linkages and 90.9% of total forward GVC linkages.
The analysis of value-added trade flows is not limited to the global setting. At the country level, the US (31 per cent) represents the largest single-country source of imported value-added in gross exports. Given concerns over US trade relationships, and the risk of future barriers to trade, it is useful to identify the sectors most heavily exposed (in $ terms) to a reduction in the ability to import US goods and services (Figure 5). Consistent with Figures 3 and 4, the Computer Programming & Information services sector is heavily dependent on US imports for their export content, particularly services imports. As foreign content accounts for 71 per cent of total export value added in this sector, almost 23 percent of total export value added derives from US services imports alone.
Combined, the Computer Programming & Information services, Pharmaceutical Products, and Financial & Insurance services sectors account for over two-thirds of the US imports that are re-exported out of the Irish economy. However, the Petroleum Products (13.2%) and Computer, Electronic & Optical Products (3.9%) sectors have the largest proportion of US goods imports as a share of total sectoral imports. Thus, these sectors are more exposed to US trade realignment, or a general reduction in the volume of US-based goods available for import.
US Import Content of Foreign Value-Added in Irish Exports by Sector
Percentage share of value added in sectoral exports Percentage share of Foreign Value Added in Exports

Source: Author’s calculations based on the 2024 OECD ICIO release.
Note: Column chart showing the sectoral dependence on US imports to produce exports. Values denominated as a share of total foreign value added in gross exports, at the sectoral level. Largest 12 sectors account for 92.4% of bilateral US imports.
Finally, it is useful to consider the role of specific countries’ final demand in activating Irish production and trade flows. While bilateral trade statistics provide information on the initial importer of Irish goods and services, this may not necessarily be the country where final demand goods and services are consumed or intermediates are absorbed for domestic use. In the event of economic shocks or trade restrictions, Irish exporters could face increased costs or reduced demand for their goods and services. Thus, knowing these “final destination” export values provides a more complete indicator of the specific country-level risk exposures to the Irish economy.
Final Absorption of Irish Gross Exports by Importing Country and Exporting Sector
Percentage share of total absorption

Source: Author’s calculations based on the 2024 OECD ICIO release.
Note: Column chart showing the country of final absorption for Irish exports. Navy segments represent value-added share of exports from goods-producing sectors, while teal segments represent value-added share of exports from services-producing sectors.
Across our largest trading partners, the EU accounts for almost one-third of total Irish export absorption, while the US (20 per cent) is the largest single-country absorber of Irish export value added (Figure 6). Consistent with the increased importance of services in the Irish economy over the last two decades, services sector exports make up the majority (57 per cent) of aggregate export value added. Only the US imports a higher proportion of value added from goods-producing sectors than services sectors.
Overall, the various decompositions of the ICIO data shows three main sectors that are dependent on foreign value-added imports for their exports of goods and services: Computer Programming & Information Services, Pharmaceutical Products and Financial & Insurance Services. These sectors are highly dependent on backwards GVC-related trade, with the import of US services intermediates (and to a lesser extent, US goods intermediates) of considerable importance to their production processes. The decompositions also show the importance of the EU and the US as final destinations for Irish exports. Any introduction of tariffs between the USA and EU will not only impact the direct trade linkages between Ireland and the USA, but could have second-round effects due to the reduction in demand for Irish intermediate exports that are re-exported from the EU to the US, and from the US to the EU.