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Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia

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  • Mitsuyo Ando
  • Kazunobu Hayakawa
  • Fukunari Kimura

Abstract

Supply chain decoupling in the US–China confrontation has generated serious uncertainties for private businesses. This paper focuses on machinery international production networks in East Asia and tries to find quantitative evidence on supply chain decoupling by using international trade statistics, particularly from the viewpoint of middle powers such as Japan. While data on the sectoral level of trade do not show any clear evidence of supply chain decoupling, some specific US export controls indeed affect international transactions when examined at a finely disaggregated level. We econometrically measure the effect of some of the US policies on Japanese exports to China. The recent strengthening of US export controls related to supercomputers and advanced integrated circuits is likely to generate further effects. Nevertheless, the supply chain decoupling seems to end up as a partial one, and a large portion of International Production Networks (IPNs) may remain active. In conclusion, the paper briefly discusses the policy implications of the analysis.

Suggested Citation

  • Mitsuyo Ando & Kazunobu Hayakawa & Fukunari Kimura, 2024. "Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 62-79, January.
    • Handle: RePEc:bla:asiapr:v:19:y:2024:i:1:p:62-79
    DOI: 10.1111/aepr.12439
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    References listed on IDEAS

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    1. Mitsuyo Ando & Fukunari Kimura & Kenta Yamanouchi, 2022. "East Asian Production Networks Go Beyond the Gravity Prediction," Asian Economic Papers, MIT Press, vol. 21(2), pages 78-101, Summer.
    2. Fukunari KIMURA, 2006. "International Production and Distribution Networks in East Asia: Eighteen Facts, Mechanics, and Policy Implications," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 326-344, December.
    3. Hayakawa, Kazunobu & Ito, Keiko & Fukao, Kyoji & Deseatnicov, Ivan, 2023. "The impact of the strengthening of export controls on Japanese exports of dual-use goods," International Economics, Elsevier, vol. 174(C), pages 160-179.
    4. Mitsuyo Ando & Fukunari Kimura & Ayako Obashi, 2021. "International Production Networks Are Overcoming COVID-19 Shocks: Evidence from Japan's Machinery Trade," Asian Economic Papers, MIT Press, vol. 20(3), pages 40-72, Fall.
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    Cited by:

    1. Sébastien Miroudot, 2024. "Comment on “Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 82-83, January.
    2. Keiko Ito, 2024. "Comment on “Supply Chain Decoupling: Geopolitical Debates and Economic Dynamism in East Asia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 80-81, January.
    3. Takatoshi Ito & Kazumasa Iwata & Colin McKenzie & Shujiro Urata, 2024. "Deglobalization: Editors' Overview," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 1-17, January.

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