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Evolution of Machinery Production Networks: Linkage of North America with East Asia

Author

Listed:
  • Mitsuyo Ando

    () (Faculty of Business and Commerce Keio University)

  • Fukunari Kimura

    () (Faculty of Economics Keio University)

Abstract

This paper investigates new developments in the pattern of machinery trade, with a focus on the extent and depth of production networks in North America. We pay particular attention to North America's trade links with East Asia, which have intensified in the last two decades. Investigation of changes in total trade value and the growth of trade on the extensive margin both demonstrates the expanding fragmentation of production in North America as well as the strengthening of connections with Mexico. Our quantitative analysis, which is based on gravity estimation of trade volume and extensive margin trade responses, also provides evidence that U.S. imports of machinery from East Asia are especially strong, and further, that Mexico's role has changed, as it now provides a bridge for trade between East Asia and the United States. These new developments in the pattern of machinery trade reflect reductions in services link costs, the further evolution of production sharing in the U.S.–Mexico nexus, and the strengthening competitiveness of production networks based in East Asia. © 2014 The Earth Institute at Columbia University and the Massachusetts Institute of Technology

Suggested Citation

  • Mitsuyo Ando & Fukunari Kimura, 2014. "Evolution of Machinery Production Networks: Linkage of North America with East Asia," Asian Economic Papers, MIT Press, vol. 13(3), pages 121-160, Fall.
  • Handle: RePEc:tpr:asiaec:v:13:y:2014:i:3:p:121-160
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    References listed on IDEAS

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    More about this item

    Keywords

    machinery trade; North America; trade; growth; Mexico; East Asia; total trade value;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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