Foreign Direct Investment, Intra-Regional Trade and Production Sharing in East Asia

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Foreign Direct Investment, Intra-Regional Trade and Production Sharing in East Asia

Author Info

Nathalie AMINIAN
K. C. FUNG
IIZAKA Hitomi

Additional information is available for the following registered author(s):

K.C. Fung

Abstract

The aim of this paper is twofold. First, it examines the trend and nature of East Asian trade. The United Nations BEC classification is utilized to categorize total trade into trade in semi-finished goods, trade in components and parts, trade in capital goods as well as trade in final consumption goods. It shows that the increasing importance of East Asia as a trading region is due at least partially to the rising trade in components and parts. Next, it tries to find out if foreign direct investment plays a role in the import and export behavior of East Asian intra-regional trade. Using a gravity model, it evidences that in general FDI is important in explaining imports and exports of intra-East Asian trade. In particular, FDI is especially important in explaining trade in components and parts, followed by trade in capital goods. This helps confirm that FDI and trade associated with production fragmentation in East Asia are complementary.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 07064.

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Length: 43 pages
Date of creation: Dec 2007
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Handle: RePEc:eti:dpaper:07064

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Chapter
- Nathalie Aminian, K.C. Fung, Hitomi Iizaka and Alan Siu, 2008. "Foreign direct investment, intraregional trade and production sharing in East Asia," Publication STUDIES IN TRADE AND INVESTMENT, in: Mia Mikic (ed.), Emerging Trade Issues for Policymakers in Developing Countries in Asia and the Pacific, chapter 3 Trade Policy Section, Trade and Investment Division, UNESCAP. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-01-05 (All new papers)
NEP-DEV-2008-01-05 (Development)
NEP-INT-2008-01-05 (International Trade)
NEP-SEA-2008-01-05 (South East Asia)

References listed on IDEAS
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Prema-chandra Athukorala, 2005. "Product Fragmentation and Trade Patterns in East Asia," Asian Economic Papers, MIT Press, vol. 4(3), pages 1-27, October. [Downloadable!] (restricted)
Other versions:
- Prema-chandra Athukorala, 2003. "Product Fragmentation and Trade Patterns in East Asia," Departmental Working Papers 2003-21, Australian National University, Economics RSPAS. [Downloadable!]
Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Blackwell Publishing, vol. 72(1), pages 135-159, 01. [Downloadable!] (restricted)
Other versions:
- Gene M. Grossman & Elhanan Helpman, 2002. "Outsourcing in a Global Economy?," Harvard Institute of Economic Research Working Papers 1966, Harvard - Institute of Economic Research. [Downloadable!]
- Gene M. Grossman & Elhanan Helpman, 2002. "Outsourcing in a Global Economy," NBER Working Papers 8728, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Grossman, Gene & Helpman, Elhanan, 2002. "Outsourcing in a Global Economy," CEPR Discussion Papers 3165, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Grossman, G.M. & Helpman, E., 2002. "Outsourcing in a Global Economy," Papers 218, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Elhanan Helpman, 2002. "Outsourcing in a Global Economy," Working Papers 149, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics.. [Downloadable!]
Ronald Jones; Henryk Kierzkowski; Chen Lurong, 2004. "What does the evidence tell us about fragmentation and outsourcing," HEI Working Papers 09-2004, Economics Section, The Graduate Institute of International Studies. [Downloadable!]

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