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Stability of production networks in East Asia: Duration and survival of trade

  • Obashi, Ayako

This paper sheds light on the stability of international production networks in East Asia from the perspective of the duration and survival of bilateral trade relationships at the product-line level. Using highly disaggregated data for intra-East Asian machinery trade, survival analysis is conducted as well as the examinations of the duration and volatility of trade relationships. The product-level analyses reveal that, compared to machinery finished products, machinery parts & components are traded through longer-lived and more stable relationships among East Asian countries. Once transactions are started, trade relationships of machinery parts & components are more likely to be maintained between countries even at a long distance, regardless of the exchange-rate fluctuations. The probability of discontinuing trade relationships of machinery finished products, on the other hand, are more likely to be sensitive to the level of trading cost as well as the exchange-rate fluctuations.

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Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 22 (2010)
Issue (Month): 1 (January)
Pages: 21-30

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Handle: RePEc:eee:japwor:v:22:y:2010:i:1:p:21-30
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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  1. Prema-chandra Athukorala & Nobuaki Yamashita, 2005. "Production Fragmentation and Trade Integration: East Asia in a Global Context," Departmental Working Papers 2005-07, The Australian National University, Arndt-Corden Department of Economics.
  2. Kimura, Fukunari & Ando, Mitsuyo, 2005. "Two-dimensional fragmentation in East Asia: Conceptual framework and empirics," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 317-348.
  3. Tibor BesedeŇ°, 2008. "A Search Cost Perspective on Formation and Duration of Trade," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 835-849, November.
  4. Arndt, Sven W. & Kierzkowski, Henryk (ed.), 2001. "Fragmentation: New Production Patterns in the World Economy," OUP Catalogue, Oxford University Press, number 9780199243310, March.
  5. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
  6. Volker Nitsch, 2009. "Die another day: duration in German import trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(1), pages 133-154, April.
  7. Gene M. Grossman & Elhanan Helpman, 2002. "Managerial Incentives and the International Organization of Production," Working Papers 147, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
  8. Tibor Besedes & Thomas Prusa, 2006. "Ins, outs, and the duration of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 266-295, February.
  9. Deardorff, A.V., 1998. "Fragmentation in Simple Trade Models," Papers 98-11, Michigan - Center for Research on Economic & Social Theory.
  10. Mitsuyo Ando & Fukinari Kimura, 2003. "The Formation of International Production and Distribution Networks in East Asia," NBER Working Papers 10167, National Bureau of Economic Research, Inc.
  11. Fukao, Kyoji & Ishido, Hikari & Ito, Keiko, 2003. "Vertical Intra-Industry Trade and Foreign Direct Investment in East Asia," Discussion Paper Series a434, Institute of Economic Research, Hitotsubashi University.
  12. 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.
  13. Sven Arndt, 2002. "Production Sharing and Regional Integration," Claremont Colleges Working Papers 2002-10, Claremont Colleges.
  14. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February.
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