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Product Fragmentation and Trade Patterns in East Asia

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Author Info
Prema-chandra Athukorala ()

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Abstract

product fragmentation - the cross-border dispersion of component production/assembly within vertically integrated production processes - is an important feature of the deepening structural interdependence of the world economy. This paper examines the implications of this phenomenon for global and regional trade patterns, with special emphasis on countries in East Asia, using a new data set culled from the UN trade database. It is found that, while 'fragmentation trade' has generally grown faster than total world trade in manufacturing, the degree of dependence of East Asia on this new form of international specialisation is proportionately larger compared to North America and Europe. The upshot is that international product fragmentation has made the East Asian growth dynamism increasingly reliant on extra-regional trade, strengthening the case for a global, rather than a regional, approach to trade and investment policymaking.

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Publisher Info
Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2003-21.

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Length: 69 pages
Date of creation: Oct 2003
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Handle: RePEc:pas:papers:2003-21

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Related research
Keywords: product fragmentation globalisation multinational enterprises

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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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. Prema-Chandra Athukorala & Jayant Menon, 1997. "AFTA and the Investment-Trade Nexus in ASEAN," The World Economy, Blackwell Publishing, vol. 20(2), pages 159-174, 03. [Downloadable!] (restricted)
  2. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2003. "The Effects of Multinational Production on Wages and Working Conditions in Developing Countries," NBER Working Papers 9669, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics. [Downloadable!]
    Other versions:
  4. Michael Borrus, 1997. "Left for Dead: Asian Production Networks and the Revival of US Electronics," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series 1080, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley. [Downloadable!]
  5. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 327-377. [Downloadable!]
  6. Görg, H & Ruane, F, 1999. "Globalisation and Fragmentation: Evidence from the Electronics Industry in Ireland," Trinity Economics Papers 9911, Trinity College Dublin, Department of Economics. [Downloadable!]
  7. Ng, Francis & Yeats, Alexander, 1999. "Production sharing in East Asia : who does what for whom, and why?," Policy Research Working Paper Series 2197, The World Bank. [Downloadable!]
  8. Sharpston, Michael, 1975. "International Sub-Contracting," Oxford Economic Papers, Oxford University Press, vol. 27(1), pages 94-135, March. [Downloadable!] (restricted)
  9. Barry, Frank & Bradley, John, 1997. "FDI and Trade: The Irish Host-Country Experience," Economic Journal, Royal Economic Society, vol. 107(445), pages 1798-1811, November. [Downloadable!] (restricted)
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  10. Slaughter, Matthew J., 2000. "Production transfer within multinational enterprises and American wages," Journal of International Economics, Elsevier, vol. 50(2), pages 449-472, April. [Downloadable!] (restricted)
  11. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April. [Downloadable!] (restricted)
  12. Jeffrey A. Frankel & Shang-Jin Wei, 1995. "The new regionalism and Asia: impact and options," Pacific Basin Working Paper Series 95-10, Federal Reserve Bank of San Francisco.
  13. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June. [Downloadable!] (restricted)
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  14. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June. [Downloadable!] (restricted)
  15. Gordon H. Hanson & Raymond J. Mataloni, Jr. & Matthew J. Slaughter, 2001. "Expansion Strategies of U.S. Multinational Firms," NBER Working Papers 8433, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
Full references

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. Prema-Chandra Athukorala, 2006. "Post-crisis export performance: The Indonesian experience in regional perspective," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 42(2), pages 177-211, August. [Downloadable!] (restricted)
  2. Kelly Bird & Sandy Cuthbertson & Hal Hill, 2007. "Making Trade Policy in a New Democracy after a Deep Crisis: Indonesia," Departmental Working Papers 2007-01, Australian National University, Economics RSPAS. [Downloadable!]
    Other versions:
  3. Prema-chandra Athukorala, 2006. "Multinational Enterprises and Manufacturing for Export in Developing Asian Countries: Emerging Patterns and Opportunities for Latecomers," Hi-Stat Discussion Paper Series d06-193, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  4. Prema-chandra Athukorala, 2006. "Multinational Production Networks and the New Geo-economic Division of Labour in the Pacific Rim," Departmental Working Papers 2006-09, Australian National University, Economics RSPAS. [Downloadable!]
  5. Prema-chandra Athukorala, 2007. "The Rise of China and East Asian Export Performance: Is the Crowding-out Fear Warranted?," Departmental Working Papers 2007-10, Australian National University, Economics RSPAS. [Downloadable!]
  6. Götz Zeddies, 2007. "Determinants of International Fragmentation of Production in the European Union," IWH Discussion Papers 15-07, Halle Institute for Economic Research. [Downloadable!]
  7. Peter Drysdale & Xinpeng Xu, 2003. "Taiwans Role in the Economic Architecture of East Asia and the Pacific," Trade Working Papers 373, East Asian Bureau of Economic Research. [Downloadable!]
  8. Peter Drysadale, 2005. "Regional Cooperation in East Asia and FTA Strategies," Trade Working Papers 382, East Asian Bureau of Economic Research. [Downloadable!]
  9. Prema-chandra Athukorala & Nobuaki Yamashita, 2005. "Production Fragmentation and Trade Integration: East Asia in a Global Context," Departmental Working Papers 2005-07, Australian National University, Economics RSPAS. [Downloadable!]
    Other versions:
  10. Mats Furby, 2005. "Evaluating the Malaysian Export Processing Zones With special focus on the electronic industry," International Trade 0510004, EconWPA. [Downloadable!]
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