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Global production sharing: exploring Australia's competitive edge

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  • Prema-chandra Athukorala
  • Tala Talgaswatta
  • Omer Majeed

Abstract

Global production sharing — cross-border dispersion of production processes within vertically integrated global industries — has been an increasingly important structural feature of economic globalization in the recent decades. This paper examines patterns and determinants of global production sharing with an emphasis on how Australian manufacturing fits into global production networks (GPNs). Though Australia is a minor player in GPNs, there is evidence that Australian manufacturing has a distinct competitive edge in specialized, skill-intensive tasks in several industries such as aircrafts, medical devices, machine tools, measuring and scientific equipment, and photographic equipment. Specialization in high-value-to-weight components and final goods within GPNs, which are suitable for air transport, helps Australian manufacturing to overcome the 'tyranny of distance' in world trade. Being predominantly 'relationship-specific', Australian GPN exports are not significantly susceptible to real exchange rate appreciation.

Suggested Citation

  • Prema-chandra Athukorala & Tala Talgaswatta & Omer Majeed, 2016. "Global production sharing: exploring Australia's competitive edge," Departmental Working Papers 2016-05, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2016-05
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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2016-05/2016-05_athukorala_et_al_gps_wp_2016.pdf
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    Cited by:

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    2. Dixon, Peter B. & Rimmer, Maureen T., 2022. "Winners and losers in global supply chain trade: Embedding GSC in CGE," Economic Modelling, Elsevier, vol. 106(C).
    3. Prema-chandra Athukorala & Tala Talgaswatta & Omer Majeed, 2017. "Global production sharing: Exploring Australia's competitive edge," The World Economy, Wiley Blackwell, vol. 40(10), pages 2172-2192, October.
    4. Richard Pomfret, 2021. "Trade policy review of Australia," The World Economy, Wiley Blackwell, vol. 44(12), pages 3507-3515, December.
    5. Bandara, Yapa M.W.Y. & Sharma, Kishor & Chakrabarty, Debajyoti, 2019. "Trends, patterns and determinants of production sharing in Australian manufacturing," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 1-11.

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    More about this item

    Keywords

    Australian manufacturing; global production sharing; global production networks; gravity model;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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