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Integrating India with Asian Production Networks: Prospects and Challenges

Author

Listed:
  • Biswajit Nag
  • Biswa Nath Bhattacharyay
  • Debdeep De

Abstract

The formation of regional production networks (RPNs) is one of the most important drivers of growth in East and Southeast Asia. In view of slowdown in growth and even recession in advanced economies as a result of the adverse impact of the global financial crisis of 2008 and the ongoing European debt crisis, RPNs need to reorient their production and exports toward rising middle class of Asia. To successfully implement the new initiative of “Make in India”, India needs to be integrated significantly with the RPN. The paper attempts to assess how far intra-industry trade in the form of production and service networks will grow and contribute to the rapid growth in China, India, and Southeast Asian countries, especially from India's perspective. It also examines the trends and patterns; and prospects of integration as well as the prospects for, and the challenges and risks of, significantly integrating India with the RPN. The paper focuses on electronics, automobiles and auto parts and components. The paper finds that in view of high competitiveness in providing outsourced information technology and R&D services in a wide range of industries, India has tremendous potential to integrate with RPN and become a key player like the PRC. India should improve technological capability, ease of doing business, infrastructure, and local support industries as well as EASE efficient governance and regulatory system, including full transparency in the application of the law.

Suggested Citation

  • Biswajit Nag & Biswa Nath Bhattacharyay & Debdeep De, 2015. "Integrating India with Asian Production Networks: Prospects and Challenges," CESifo Working Paper Series 5616, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5616
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp5616.pdf
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    References listed on IDEAS

    as
    1. Thorbecke, Willem & Salike, Nimesh, 2011. "Understanding Foreign Direct Investment in East Asia," ADBI Working Papers 290, Asian Development Bank Institute.
    2. Urata, Shujiro & Kawai, Hiroki, 2002. "Technological Progress by Small and Medium Enterprises in Japan," Small Business Economics, Springer, vol. 18(1-3), pages 53-67, Feb.- May.
    3. Willem Thorbecke & Biswa N. Bhattacharyay, 2012. "Role of Production Networks in Sustaining and Rebalancing Asia's Growth," CESifo Working Paper Series 3896, CESifo Group Munich.
    4. World Bank, 2005. "Global Economic Prospects 2005 : Trade, Regionalism and Development," World Bank Publications, The World Bank, number 14783, November.
    5. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
    6. Kimura, Fukunari & Ando, Mitsuyo, 2003. "Fragmentation and agglomeration matter: Japanese multinationals in Latin America and East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 287-317, December.
    7. repec:idb:brikps:9179 is not listed on IDEAS
    8. Kojima, Kiyoshi, 2000. "The "flying geese" model of Asian economic development: origin, theoretical extensions, and regional policy implications," Journal of Asian Economics, Elsevier, vol. 11(4), pages 375-401.
    9. Ramkishen S. Rajan & Rahul Sen, 2002. "A Decade of Trade Reforms in India," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 3(4), pages 87-100, October.
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    12. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
    13. Tomohiro MACHIKITA & Yasushi UEKI, 2010. "Spatial Architecture of the Production Networks in Southeast Asia," Working Papers DP-2010-01, Economic Research Institute for ASEAN and East Asia (ERIA).
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    Cited by:

    1. THORBECKE, Willem & Nimesh SALIKE, 2013. "Foreign Direct Investment in East Asia," Policy Discussion Papers 13003, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    Asian regional production network; ASEAN; India; People Republic of China; FTA; manufacturing and service sectors;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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