Abstract

International trade in intermediate inputs has been identified as a potentially powerful transmission channel for the propagation of foreign shocks to the domestic economy. Moreover, this channel has been found to be amplified through input-output linkages domestically. This note addresses the importance of these channels for the Norwegian economy. First, I study the extent to which foreign intermediates are used as inputs in the domestic sectors. The data show that almost 80 percent of Norwegian industries engage in international trade in intermediates and that foreign intermediates account for a larger share of total intermediate inputs in tradable than in non-tradable sectors. Second, I examine the extent of (cross-country) intersectoral dependence in a panel composed of five sectors. I find that the role of financial services as a source of inputs to the other industries has increased since 1992. The data also reveal marked changes in input use in the petroleum and natural gas and the financial services sectors.