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Production Fragmentation and Trade Integration: East Asia in a Global Context

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Author Info
Prema-chandra Athukorala ()
Nobuaki Yamashita ()

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Abstract

This paper examines the implications of international production fragmentation for analysing global and regional trade patterns, with special emphasis on countries in East Asia. It is found that, while 'fragmentation trade' has generally grown faster than total world manufacturing trade, the degree of dependence of East Asia on this new form of international specialisation is proportionately larger compared to North America and Europe. International production fragmentation has certainly played a pivotal role in continuing dynamism of the East Asian economies and increasing intra-regional economic interdependence. There is, however, no evidence to suggest that this new form of international exchange has contributed to lessoning the regions dependence on the global economy. On the contrary, growth dynamism based on vertical specialisation depends inexorably on extra-regional trade in final good, and this dependence has in fact increased over the years.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 2005-07.

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Length: 48 pages
Date of creation: 2005
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Handle: RePEc:pas:papers:2005-07

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Related research
Keywords: production fragmentation; vertical specialisation; regional integration;

Other versions of this item:

Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
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. Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 2001. "Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 80-104, March. [Downloadable!] (restricted)
  2. 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!]
  3. Gene M. Grossman & Elhanan Helpman, 2002. "Outsourcing in a Global Economy," NBER Working Papers 8728, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Hartmut Egger & Peter Egger, 2000. "Outsourcing and skill-specific employment in a small economy: Austria and the fall of the Iron Curtain," Economics working papers 2000-24, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  5. Ng, Francis & Yeats, Alexander, 2003. "Major trade trends in East Asia : what are their implications for regional cooperation and growth," Policy Research Working Paper Series 3084, The World Bank. [Downloadable!]
  6. Holger Görg, 2000. "Fragmentation and trade: US inward processing trade in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 136(3), pages 403-422, 09. [Downloadable!] (restricted)
  7. 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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  8. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February. [Downloadable!] (restricted)
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  9. Peter A. Petri, 1993. "The East Asian Trading Bloc: An Analytical History," NBER Chapters, in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 21-52 National Bureau of Economic Research, Inc. [Downloadable!]
  10. Sven W. Arndt, 1997. "Globalization and the Open Economy," Working Papers 9701, Lowe Institute of Political Economy. [Downloadable!]
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  11. Prema-chandra Athukorala, 2003. "Product Fragmentation and Trade Patterns in East Asia," Departmental Working Papers 2003-21, Australian National University, Economics RSPAS. [Downloadable!]
    Other versions:
  12. Andrew Jones, 2007. "Introduction," Local Economy, Taylor and Francis Journals, vol. 22(3), pages 221-222. [Downloadable!] (restricted)
  13. repec:rus:hseeco:123689 is not listed on IDEAS
  14. 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!]
  15. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April. [Downloadable!] (restricted)
  16. 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.
  17. Hartmut Egger & Peter Egger, 2005. "The Determinants of EU Processing Trade," The World Economy, Blackwell Publishing, vol. 28(2), pages 147-168, 02. [Downloadable!] (restricted)
  18. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March. [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. Willenbockel, Dirk & Robinson, Sherman, 2009. "The Global Financial Crisis, LDC Exports and Welfare: Analysis with a World Trade Model," MPRA Paper 15376, University Library of Munich, Germany. [Downloadable!]
  2. Dean, Judith & Fung , K.C. & Wang, Zhi, 2009. "How vertically specialized is Chinese trade?," BOFIT Discussion Papers 31/2008, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  3. 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)
  4. Rahardja, Sjamsu, 2007. "Big dragon, little dragons : China's challenge to the machinery exports of southeast Asia," Policy Research Working Paper Series 4297, The World Bank. [Downloadable!]
  5. Prema-Chandra Athukorala, 2008. "China's integration into global production networks and its implications for export-led growth strategy in other countries in the region," Departmental Working Papers 2008-04, Australian National University, Economics RSPAS. [Downloadable!]
  6. Amador, João & Cabral, Sónia, 2008. "Vertical specialization across the world: a relative measure," MPRA Paper 9618, University Library of Munich, Germany. [Downloadable!]
  7. 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!]
  8. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany. [Downloadable!]
  9. Hayakawa, Kazunobu, 2009. "Market Access and Intermediate Goods Trade," IDE Discussion Papers 208, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  10. Götz Zeddies, 2007. "Determinants of International Fragmentation of Production in the European Union," IWH Discussion Papers 15-07, Halle Institute for Economic Research. [Downloadable!]
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