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Fragmentation and East Asia's information technology trade

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  • Carl Bonham
  • Byron Gangnes
  • Ari Van Assche

Abstract

This article studies the growth and determinants of information technology (IT) trade in the Asia-Pacific region. We argue that the rise of IT trade must be understood within the context of increasing vertical fragmentation of production processes that has occurred over the past two decades. To evaluate this empirically, we estimate a set of pooled bilateral IT export equations for eight Asian countries, the USA and the EU, where foreign direct investment (FDI) inflows are introduced as a proxy for fragmentation. We apply a panel cointegration approach that allows for heterogeneity in short-run dynamics and in fixed effects. Consistent with production fragmentation, we find that the evolution of IT trade can be explained in part by traditional income and relative price effects but also by FDI inflows.

Suggested Citation

  • Carl Bonham & Byron Gangnes & Ari Van Assche, 2007. "Fragmentation and East Asia's information technology trade," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 215-228.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:2:p:215-228
    DOI: 10.1080/00036840500427635
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    Citations

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    Cited by:

    1. Hudea Caraman, Oana Simona & Stancu, Stelian, 2012. "Foreign Direct Investments, Technology Transfer and Economic Growth. A Panel Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 85-102, June.
    2. Byron Gangnes & Ari Van Assche, 2010. "Global Production Networks in Electronics and Intra-Asian Trade," LICOS Discussion Papers 25710, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    3. Ari Van Assche & Byron Gangnes, 2010. "Electronics production upgrading: is China exceptional?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(5), pages 477-482.
    4. Salotti, Simone, 2008. "Global imbalances and household savings: the role of wealth," MPRA Paper 17729, University Library of Munich, Germany, revised 2009.
    5. Van Assche, Ari, 2008. "Modularity and the organization of international production," Japan and the World Economy, Elsevier, vol. 20(3), pages 353-368, August.
    6. Das, Gouranga, 2010. "Globalization, socio-institutional factors and North–South knowledge diffusion: Role of India and China as Southern growth progenitors," MPRA Paper 37252, University Library of Munich, Germany, revised 01 Aug 2011.
    7. Ari Van Assche & Byron Gangnes, 2011. "Product Modularity and the Rise of Global Value Chains: Insights from the Electronics Industry," CIRANO Working Papers 2011s-64, CIRANO.
    8. MOTOHASHI Kazuyuki & YUAN Yuan, 2009. "Technology Spillovers from Multinationals to Local Firms: Evidence from Automobile and Electronics Firms in China," Discussion papers 09005, Research Institute of Economy, Trade and Industry (RIETI).
    9. Ari Van Assche, 2006. "Modularity and the Organization of International Production," CIRANO Working Papers 2006s-09, CIRANO.
    10. Kubo, Akihiro, 2012. "The US tech pulse, stock prices, and exchange rate dynamics: Evidence from Asian developing countries," Journal of Asian Economics, Elsevier, vol. 23(6), pages 680-687.

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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