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The Formation of International Production and Distribution Networks in East Asia

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Author Info
Mitsuyo Ando
Fukinari Kimura

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Abstract

The international production and distribution networks consist of vertical production chains and distribution networks extended across a number of countries. This paper claims that the international production and distribution networks in East Asia present distinctive characters in their significance in the regional economy, their geographical extensiveness involving a large number of countries in the region, and their sophistication of both intra-firm and arm's-length relationships across different firm nationalities. The paper starts from reviewing crucial changes in policy framework observed in the developing East Asian countries a decade ago and sketching the theoretical thoughts explaining the mechanics of international production and distribution networks. Then, the empirical part of the paper examines the micro data of Japanese corporate firms to make a closer look at the nature of networks through the pattern of FDI after analyzing overall trade patterns of the major East Asian countries to confirm the importance of international trade of machinery parts and components. In addition, the paper quantifies the magnitude of economic activities of Japanese firms through different channels of transactions, using the firm nationality approach. The last part of the paper discusses policy implication of the networks.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10167.

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Date of creation: Dec 2003
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Handle: RePEc:nbr:nberwo:10167

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F1 - International Economics - - Trade
F2 - International Economics - - International Factor Movements and International Business

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Deardorff, A.V., 1998. "Fragmentation Across Cones," Papers 98-14, Michigan - Center for Research on Economic & Social Theory.
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  2. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical intra-industry trade and foreign direct investment in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 468-506, December. [Downloadable!] (restricted)
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  3. Fukunari Kimura, 2000. "Location and Internalization Decisions: Sector Switching in Japanese Outward Foreign Direct Investment," NBER Chapters, in: The Role of Foreign Direct Investment in East Asian Economic Development, NBER-EASE Volume 9, pages 79-111 National Bureau of Economic Research, Inc. [Downloadable!]
  4. Fukunari Kimura & Robert E. Baldwin, 1996. "Application of Nationality-Adjusted Net Sales and Value Added Framework: The Case of Japan," NBER Working Papers 5670, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Deardorff, Alan V., 2001. "Fragmentation in simple trade models," The North American Journal of Economics and Finance, Elsevier, vol. 12(2), pages 121-137, July. [Downloadable!] (restricted)
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  6. Kimura, Fukunari, 2002. " Subcontracting and the Performance of Small and Medium Firms in Japan," Small Business Economics, Springer, vol. 18(1-3), pages 163-75, Feb.- May. [Downloadable!] (restricted)
  7. Kimura, Fukunari & Ando, Mitsuyo, 2003. "Fragmentation and agglomeration matter: Japanese multinationals in Latin America and East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 287-317, December. [Downloadable!] (restricted)
  8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Toshihiro Okubo, 2009. "Firm heterogeneity and Ricardian comparative advantage within and across sectors," Economic Theory, Springer, vol. 38(3), pages 533-559, March. [Downloadable!] (restricted)
  2. Toshihiro Okubo, 2004. "Intra-industry Trade and Production Networks," HEI Working Papers 13-2004, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  3. Shafaeddin, Mehdi, 2008. "South-South Regionalism And Trade Cooperation In The Asia-Pacific Region," MPRA Paper 10886, University Library of Munich, Germany. [Downloadable!]
  4. Richard E. Baldwin & Frédéric Robert-Nicoud, 2007. "Offshoring: General Equilibrium Effects on Wages, Production and Trade," CEP Discussion Papers dp0794, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  5. Hiro Lee & Robert F. Owen & Dominique van der Mensbrugghe, 2008. "Regional Integration in Asia and Its Effects on the EU and North America," OSIPP Discussion Paper 08E012, Osaka School of International Public Policy, Osaka University. [Downloadable!]
  6. Baldwin, Richard, 2006. "Managing the Noodle Bowl: The Fragility of East Asian Regionalism," CEPR Discussion Papers 5561, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Guillaume GAULIER & Francoise LEMOINE & Deniz ÜNAL-KESENCI, 2004. "CHINA's INTEGRATION IN ASIAN PRODUCTION NETWORKS AND ITS IMPLICATIONS," Discussion papers 04033., Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  8. Yose Rizal Damuri & Raymond Atje & Arya B. Gaduh, 2006. "Integration and Trade Specialization in East Asia," CSIS Economics Working Paper Series WPE094, Centre for Strategic and International Studies, Jakarta, Indonesia. [Downloadable!]
    Other versions:
  9. ANDO Mitsuyo & IRIYAMA Akie, 2009. "International Production Networks and Export/Import Responsiveness to Exchange Rates: The case of Japanese manufacturing firms," Discussion papers 09049, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  10. Ramon Moreno, 2007. "Experiences With Current Account Deficits in Southeast Asia," Working Papers Central Bank of Chile 452, Central Bank of Chile. [Downloadable!]
  11. Françoise Nicolas, 2008. "The political economy of regional integration in East Asia," Economic Change and Restructuring, Springer, vol. 41(4), pages 345-367, December. [Downloadable!] (restricted)
  12. Christopher Dent, 2009. "Japan, China and East Asian regionalism: implications for the European Union," Asia Europe Journal, Springer, vol. 7(1), pages 161-178, February. [Downloadable!] (restricted)
  13. ITO Keiko & FUKAO Kyoji, 2007. "Determinants of the Profitability of Japanese Manufacturing Affiliates in China and Other Regions: Does Localization of Procurement, Sales, and Management Matter?," Discussion papers 07001, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  14. Geloso Grosso, Massimo & Shepherd, Ben, 2009. "Liberalizing air cargo services in APEC," MPRA Paper 17781, University Library of Munich, Germany. [Downloadable!]
  15. Kyoji Fukao; Toshihiro Okubo, 2004. "Why Has the Border Effect in the Japanese Market Declined?," HEI Working Papers 12-2004, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  16. Haddad, Mona, 2007. "Trade integration in East Asia : the Role of China and production networks," Policy Research Working Paper Series 4160, The World Bank. [Downloadable!]
  17. Hayakawa, Kazunobu, 2008. "The Choice of Transport Mode: Evidence from Japanese Exports to East Asia," IDE Discussion Papers 155, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  18. Michel Fouquin, 2008. "Regionalization in East Asia," Economic Change and Restructuring, Springer, vol. 41(4), pages 289-313, December. [Downloadable!] (restricted)
  19. Hayakawa, Kazunobu & Kimura, Fukunari, 2008. "The Effect of Exchange Rate Volatility on International Trade: The Implication for Production Networks in East Asia," IDE Discussion Papers 156, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  20. Hayakawa, Kazunobu, 2009. "Market Access and Intermediate Goods Trade," IDE Discussion Papers 208, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
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