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Impact of the ASEAN Economic Community on ASEAN Production Networks

Author

Listed:
  • Kornkarun Cheewatrakoolpong

    (Asian Development Bank Institute (ADBI))

  • Chayodom Sabhasri
  • Nath Bunditwattanawong

Abstract

Empirical evidence suggests that the emergence of international production networks in East Asia results from market-driven forces such as vertical specialization and higher production costs in the home countries and institutional-led reasons such as free trade agreements. The growth in trade in parts and components since the 1990s, especially with the People’s Republic of China (PRC), one of the important major assembly bases, confirms the existence of international production sharing in the region. Also, a decline in the share of parts and components trade in several members of the Association of Southeast Asian Nations (ASEAN) such as Indonesia and Thailand indicates the increasing importance of the ASEAN countries as assembly bases for Japanese multinational enterprises (MNEs). This paper examines two industries—autos and auto parts, and hard disk drives (HDDs)—to understand international production networks. The study examines the structure of vertical intra-industry trade among East Asian countries, especially members of the Association of Southeast Asian Nations, depicts international production sharing in the selected industries, namely HDD, and automobiles and automotive parts, in the region. The study also points out the importance of the People’s Republic of China and Thailand as assembly bases. It concludes that investment promotion policies contributed more to the emergence of international production networks than free trade agreements.

Suggested Citation

  • Kornkarun Cheewatrakoolpong & Chayodom Sabhasri & Nath Bunditwattanawong, 2013. "Impact of the ASEAN Economic Community on ASEAN Production Networks," Trade Working Papers 23393, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:23393
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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. Nathalie AMINIAN & K. C. FUNG & IIZAKA Hitomi, 2007. "Foreign Direct Investment, Intra-Regional Trade and Production Sharing in East Asia," Discussion papers 07064, Research Institute of Economy, Trade and Industry (RIETI).
    3. Lionel Fontagné & Michaël Freudenberg, 1997. "Intra-Industry Trade: Methodological Issues Reconsidered," Working Papers 1997-01, CEPII research center.
    4. Daisuke Hiratsuka, 2011. "Production Networks in Asia : A Case Study from the Hard Disk Drive Industry," Microeconomics Working Papers 23235, East Asian Bureau of Economic Research.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Techakanont, Kriengkrai., 2014. "Managing integration for better jobs and shared prosperity in the ASEAN Economic Community the case of Thailand's automotive sector," ILO Working Papers 994865253402676, International Labour Organization.
    2. repec:ilo:ilowps:486999 is not listed on IDEAS
    3. repec:ilo:ilowps:486521 is not listed on IDEAS
    4. Martin, Philip. & Abella, Manolo., 2014. "Reaping the economic and social benefits of labour mobility : ASEAN 2015," ILO Working Papers 994865213402676, International Labour Organization.
    5. Jayant Menon, 2013. "Can FTAs Support the Growth or Spread of International Production Networks in Asia?," Departmental Working Papers 2013-06, The Australian National University, Arndt-Corden Department of Economics.
    6. Yap, Josef T., 2014. "ASEAN Community 2015 : managing integration for better jobs and shared prosperity in the Philippines," ILO Working Papers 994869993402676, International Labour Organization.
    7. repec:ilo:ilowps:486525 is not listed on IDEAS

    More about this item

    Keywords

    Production Networks; East Asia; vertical specialization; trade in parts and components; ASEAN; China; MNEs; autos and auto parts; Hard Disk Drive industry; intra-dindustry;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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