Role of Production Networks in Sustaining and Rebalancing Asia's Growth
In last few decades, Asian production networks have contributed significantly toward the rapid trade expansion and economic growth in East Asia. Developed Asia produces technology-intensive intermediate goods and capital goods and ships them to the People Republic of China (PRC) and ASEAN for assembly by lower-skilled workers. The finished products are then exported to the US, Japan, Europe, and other countries. In view of ongoing global financial crisis and European debt crisis, the ability of the rest of the world to absorb Asia’s exports has decreased. Export production in some Asian countries has also been subsidized by artificially low prices for labor, land, and energy, and by lax enforcement of environmental regulations. Asian economies should thus rebalance away from relying too much on exporting subsidized goods to developed economies. On the supply side, the best way to rebalance growth is to increase productivity in order to raise wage rates and living standards. This can be done by leveraging production networks to graduate to higher value-added, knowledge-intensive activities. On the demand side, producers in the region should turn to Asian consumers as an engine of growth. This can be facilitated by improving connectivity through increased investment in connecting infrastructure such as transport and telecommunications; and by implementing a region-wide FTA. This paper addresses these issues by providing an analytic description of production networks in Asia. It then discusses how developing Asian countries could leverage production networks to facilitate technology transfer to domestic firms and how a regional FTA could bring Asian producers and consumers together. Finally, it considers how infrastructure investment in large and connecting projects could help to rebalance and sustain growth in the region through increased connectivity and reducing trade costs.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jan Wengel & Edgard Rodriguez, 2006. "SME Export Performance in Indonesia After the Crisis," Small Business Economics, Springer, vol. 26(1), pages 25-37, 02.
- Thomas W. Hertel & Roman Keeney & Maros Ivanic & L. Alan Winters, 2015.
"Why Isn't the Doha Development Agenda more Poverty Friendly?,"
World Scientific Book Chapters,
in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 18, pages 375-391
World Scientific Publishing Co. Pte. Ltd..
- Thomas W. Hertel & Roman Keeney & Maros Ivanic & L. Alan Winters, 2009. "Why Isn't the Doha Development Agenda more Poverty Friendly?," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 543-559, November.
- Hertel, Thomas & Keeney, Roman & Ivanic, Maros & Winters, Alan, 2007. "Why Isn’t the Doha Development Agenda More Poverty Friendly?," GTAP Working Papers 2292, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Nagesh Kumar & Prabir De, 2008. "East Asian Infrastructure Development in a Comparative Global Perspective : An Analysis of RIS Infrastructure Index," Development Economics Working Papers 22114, East Asian Bureau of Economic Research.
- Shujiro Urata & Toshiyuki Matsuura & Yuhong Wei, 2006. "International Intrafirm Transfer of Management Technology by Japanese Multinational Corporations," Discussion papers 06006, Research Institute of Economy, Trade and Industry (RIETI).
- World Bank, 2009. "The Service Revolution in South Asia," World Bank Other Operational Studies 19332, The World Bank.
- Ang, James B., 2008. "Determinants of foreign direct investment in Malaysia," Journal of Policy Modeling, Elsevier, vol. 30(1), pages 185-189.
- Hank Lim & Fukunari Kimura, 2009. "The Internationalisation of SMEs in Regional and Global Value Chains," IDB Publications (Working Papers) 47858, Inter-American Development Bank.
- Tourk, Khairy, 2004. "The political economy of east Asian economic integration," Journal of Asian Economics, Elsevier, vol. 15(5), pages 843-888, October.
- Arianto A. Patunru & Erna Zetha, 2010. "Indonesia's Savior: Fiscal, Monetary, Trade, or Luck?," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(4), pages 721-740, April.
- Wignaraja, Ganeshan, 2008. "FDI and Innovation as Drivers of Export Behaviour: Firm-level Evidence from East Asia," MERIT Working Papers 061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT). Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3896. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.