Joining Pre-existing International Production Networks : Implications for Indiaâ€™s Economic Integration to East Asia
AbstractThis study provides a conceptual framework to explain what kinds of difficulties a late-follower will suffer from when it tries to join pre-existing International Production Networks (IPNs). We consider the total production cost minimization problem by a multinational company (MNC) in allocating locations of fragmented production processes across borders. From the clarification of IPNrelated costs, we draw out what structural disadvantages late-follower countries have and provide several policy implications to overcome these disadvantages with more targeted efforts. Especially we put Indiaâ€™s case in the conceptual framework of the IPNs and then look at the hurdles that make Indiaâ€™s participation in the East Asian IPNs hard and sluggish. Relevant data are provided in order to support the theoretical explanations.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 23434.
Date of creation: Jun 2013
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Multinational Corporations; International Production Networks; East Asia; India; Production cost advantage; analytical model of international production networks;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-15 (All new papers)
- NEP-CWA-2013-07-15 (Central & Western Asia)
- NEP-SEA-2013-07-15 (South East Asia)
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