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Production networks in China and India: a comparative analysis

Author

Listed:
  • K. Fung

    ()

  • Hsiang-Chih Hwang
  • Francis Ng
  • Jesus Seade

Abstract

In this paper, we examine and compare the two important production hubs in Asia: China and Greater China and India and South Asia. We show that in China, Hong Kong and Taiwan, manufacturing trade has continued to be highly relevant, with trade in parts and components growing in importance. In contrast, in India, Pakistan and Sri Lanka, trade in parts and components remain limited. We then calculate various revealed comparative advantage (RCA) indices, which China having more components with RCA values exceeding one. Some of the most important components exported by China include electronic parts and telecommunication parts. One explanation is to why India is relatively weak in parts and components trade is that India is strong in service trade. Other reasons may be related to better port infrastructure, higher research and development intensity and higher educational enrollments in China. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • K. Fung & Hsiang-Chih Hwang & Francis Ng & Jesus Seade, 2013. "Production networks in China and India: a comparative analysis," Economic Change and Restructuring, Springer, vol. 46(1), pages 45-69, March.
  • Handle: RePEc:kap:ecopln:v:46:y:2013:i:1:p:45-69
    DOI: 10.1007/s10644-012-9133-4
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    References listed on IDEAS

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    1. Nathalie Aminian & K. Fung & Francis Ng, 2009. "A comparative analysis of trade and economic integration in East Asia and Latin America," Economic Change and Restructuring, Springer, vol. 42(1), pages 105-137, May.
    2. Kimura, Fukunari & Obashi, Ayako, 2011. "Production Networks in East Asia: What We Know So Far," ADBI Working Papers 320, Asian Development Bank Institute.
    3. 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.
    4. Panagariya, Arvind, 2011. "India: The Emerging Giant," OUP Catalogue, Oxford University Press, number 9780199751563.
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    7. Robert C. Feenstra & Gordon H. Hanson, 2005. "Ownership and Control in Outsourcing to China: Estimating the Property-Rights Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 729-761.
    8. Pol Antràs, 2005. "Incomplete Contracts and the Product Cycle," American Economic Review, American Economic Association, vol. 95(4), pages 1054-1073, September.
    9. Pol Antras & Elhanan Helpman, 2004. "Global Sourcing," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 552-580, June.
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    11. Kaminski, Bartlomiej & Ng, Francis, 2005. "Production disintegration and integration of Central Europe into global markets," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 377-390.
    12. Prema-chandra Athukorala, 2011. "Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?," Asian Economic Papers, MIT Press, vol. 10(1), pages 65-95, Winter/Sp.
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    14. repec:hrv:faseco:4784029 is not listed on IDEAS
    15. Barbara Spencer, 2005. "International outsourcing and incomplete contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1107-1135, November.
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    1. repec:bla:ausecr:v:50:y:2017:i:2:p:181-194 is not listed on IDEAS
    2. Fung, K.C. & Hwang, Hsiang-Chih & Ng, Francis & Seade, Jesús, 2015. "Production networks and international trade: China, Brazil and Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 421-429.
    3. Richard Pomfret & Richard Pomfret, 2014. "Expanding the Division of Labour: Trade Costs and Supply Chains in the Global Economy," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 54(3), pages 220-241, November.

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    Keywords

    India; South Asia; China; Production hubs;

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