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International Production Networks And Changing Trade Patterns In East Asia The Case Of The Electronics Industry


  • Dieter Ernst
  • Paolo Guerrieri


The purpose of this paper is to analyze how the spread of different international production networks in East Asia has affected the trade links of the region with the U.S. and Japan. We concentrate on one particular aspect, i.e. changes in the product composition of U.S. and Japanese electronics exports and imports to and from the East Asia region. We find that compared to the U.S. , Japan’s trade links with East Asia display a far greater diversity of the product groups involved. Of equal importance is a second finding: the trade balances of both countries with the region are radically different. A consistently high and growing trade deficit characterizes U.S. trade links with East Asia in the electronic industry. This is true even for computers and components, the two sectors where the U.S. has re-established itself during the last few years as an uncontested leader. This is in stark contrast to the situation in Japan, where a large and rapidly growing surplus characterizes its trade links with East Asia. Although this is now slowly changing as East Asia has become the most important source of Japanese electronics imports, there is reason to doubt whether this positive development is strong enough to reduce any time soon the asymmetric nature of Japan’s trade links with East Asia. These differences can only be partially attributed to traditional macroeconomic factors that are the focus of standard trade theory. In the paper, we show how the observed differences can be better explained by some peculiar features of the international production networks that American and Japanese firms have established in East Asia. The chain of causation appears to work both ways. Changes in the organization of international production have led to changes in the composition of bilateral trade flows. Such changes in international trade patterns, in turn, lead to further changes in the organization of international production.

Suggested Citation

  • Dieter Ernst & Paolo Guerrieri, 1997. "International Production Networks And Changing Trade Patterns In East Asia The Case Of The Electronics Industry," DRUID Working Papers 97-7, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:97-7

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    References listed on IDEAS

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    Cited by:

    1. Carl Bonham & Byron Gangnes & Ari Van Assche, 2007. "Fragmentation and East Asia's information technology trade," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 215-228.
    2. Suder, Gabriele & Liesch, Peter W. & Inomata, Satoshi & Mihailova, Irina & Meng, Bo, 2015. "The evolving geography of production hubs and regional value chains across East Asia: Trade in value-added," Journal of World Business, Elsevier, vol. 50(3), pages 404-416.
    3. repec:spr:manint:v:54:y:2014:i:2:d:10.1007_s11575-013-0195-y is not listed on IDEAS
    4. Paolo Guerrieri & Filippo Vergara Caffarelli, 2012. "Trade Openness and International Fragmentation of Production in the European Union: The New Divide?," Review of International Economics, Wiley Blackwell, vol. 20(3), pages 535-551, August.
    5. Chao-Tung Wen & Jun-Ming Chen, 2014. "Taiwan: linkage-based Clusters of Innovation – the case of Taiwan’s IT industry," Chapters,in: Global Clusters of Innovation, chapter 9, pages 222-246 Edward Elgar Publishing.
    6. Banji O. Oyeyinka, 2012. "Institutional capacity and policy for latecomer technology development," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 5(1/2), pages 83-110.
    7. Fromhold-Eisebith Martina & Eisebith Günter, 2003. "Globale Krise – regionale Gewinner?," Zeitschrift für Wirtschaftsgeographie, De Gruyter, vol. 47(1), pages 82-96, October.
    8. Dieter Ernst, 2001. "The Internet's Effects on Global Production Networks: Challenges and Opportunities for Managing in Developing Asia," Economics Study Area Working Papers 33, East-West Center, Economics Study Area.
    9. Dieter Ernst, 2000. "Placing the Networks on the Web: Challenges and Opportunities for Managing in Developing Asia," Economics Study Area Working Papers 05, East-West Center, Economics Study Area.
    10. Kuwamori, Hiroshi & Okamoto, Nobuhiro, 2007. "Industrial Networks between China and the Countries of the Asia-Pacific Region," IDE Discussion Papers 110, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    11. Imai, Ken'ichi & Shiu, Jingming, 2007. "A Divergent Path of Industrial Upgrading: Emergence and Evolution of the Mobile Handset Industry in China," IDE Discussion Papers 125, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    12. Liu, C.-L.E., 2012. "An investigation of relationship learning in cross-border buyer–supplier relationships: The role of trust," International Business Review, Elsevier, vol. 21(3), pages 311-327.

    More about this item


    international trade; international investment; economic development; business strategies; networks; Japan; USA; Asia; electronics industry;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment


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