Decomposition analysis of changes in value added. A case study of the sawmilling and wood processing industry in Germany

• Wood and wood-based products are important input positions of ES 1610 and ES 1621.
• Higher input of wood (products) does not always lead to an increase in value added.
• Driving factors are product price effect, growth effect & intermediate input effect.
• Outsourcing plays no major role in considered years and economic sectors.
• Growth effect is connected to wood input in ES 1610.

It is basically assumed that a higher level of domestic wood harvesting leads to a higher level of domestic wood use and thus to an increase of value added in the wood processing industry. However, in the past years, the wood input increased in some wood processing sectors in Germany whereas their value added decreased. Against this background we aimed to decompose changes in input and output in order to isolate the effects of value added and to determine the role of wood as intermediate input of the sawmilling and wood processing industries. We regarded the years 2006 compared to 2002 and 2010 compared to 2006. Based on statistical data, a decomposition method was developed that determines changes in the product price, the intermediate input price, the growth and the structural effect. Furthermore, a special focus was set on the impacts of price and quantity changes of the input of wood-based products. We found out, that the growth effect is connected to the wood input in the sawmilling industry in the considered years. Also, it became apparent that a higher input of wood and wood products does not automatically lead to an increase in value added.