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Fragmentation and East Asia’s Information Technology Trade

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  • Carl Bonham

    ()
    (Department of Economics, University of Hawaii at Manoa)

  • Byron Gangnes

    ()
    (Department of Economics, University of Hawaii at Manoa)

  • Ari Van Assche

    ()
    (Department of Economics, University of California at Davis)

Abstract

This paper 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 o 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 U.S. and the E.U., where 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 inflow.

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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200409.

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Length: 28 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:hai:wpaper:200409

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Keywords: fragmentation; information technology; FDI and trade; trade elasticities; panel data;

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  1. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
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Citations

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Cited by:
  1. 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.
  2. Ari Van Assche & Byron Gangnes, 2007. "Electronics Production Upgrading: Is China Exceptional?," Working Papers 200722, University of Hawaii at Manoa, Department of Economics.
  3. 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).
  4. 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.
  5. Ari Van Assche, 2006. "Modularity and the Organization of International Production," CIRANO Working Papers 2006s-09, CIRANO.
  6. Van Assche, Ari, 2008. "Modularity and the organization of international production," Japan and the World Economy, Elsevier, vol. 20(3), pages 353-368, August.
  7. Salotti, Simone, 2008. "Global imbalances and household savings: the role of wealth," MPRA Paper 17729, University Library of Munich, Germany, revised 2009.
  8. 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.
  9. 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.
  10. 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.

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