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Machinery Trade in East Asia, and the Global Financial Crisis

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  • Mitsuyo ANDO

    (Faculty of Business and Commerce, Keio University, Japan)

Abstract

The global financial crisis since Q3 2008 has influenced the world economy, including that of East Asia. This paper focuses on international production/distribution networks, mainly observed in the machinery sectors in East Asia, and attempts to examine patterns of machinery trade movements during the crisis to explore how and to what extent it has affected trade. More specifically, the paper analyzes these trade patterns, with distinctions between machinery intermediate goods and machinery final products, among trading partners (regions), between intra-regional trade and inter-regional trade, and among machinery sectors, so as to investigate whether there were any differences in reactions to the crisis. Moreover, in order to consider possible seasonality in trade, the paper also attempts to apply the X-12 model and discusses features of trade patterns based not only on actual trade values but also on estimated trade values with seasonal adjustment. Our results demonstrate that effects of the global financial crisis on international production/distribution networks in East Asia do indeed exist but, at the same time, that East Asia’s trade has rapidly recovered through the regional production/distribution networks. In particular, East Asia itself is the major contributor to such a rapid recovery, not only for machinery parts and components trade but also for the machinery final goods trade. This suggests that the existence of dense production/distribution networks in East Asia helps industries to avoid becoming destabilized. It also suggests that East Asia is increasingly gaining importance not only as the production site but also as the consumption site for final products that are produced in the production/distribution networks in the region, implying that [further] activation and expansion of intra-regional demand are essential.

Suggested Citation

  • Mitsuyo ANDO, 2010. "Machinery Trade in East Asia, and the Global Financial Crisis," Working Papers DP-2010-10, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:dp-2010-10
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    References listed on IDEAS

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    1. Mitsuyo Ando & Fukunari Kimura, 2005. "The Formation of International Production and Distribution Networks in East Asia," NBER Chapters, in: International Trade in East Asia, pages 177-216, National Bureau of Economic Research, Inc.
    2. Alan V. Deardorff, 2011. "Fragmentation in simple trade models," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 16, pages 165-181, World Scientific Publishing Co. Pte. Ltd..
    3. Ayako Obashi, 2011. "Resiliency of production networks in Asia: Evidence from the Asian crisis," STUDIES IN TRADE AND INVESTMENT, in: Trade-led growth: A sound strategy for Asia, chapter 3, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    4. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    5. Ito, Takatoshi & Rose, Andrew K. (ed.), 2005. "International Trade in East Asia," National Bureau of Economic Research Books, University of Chicago Press, number 9780226378961.
    6. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
    7. Kimura, Fukunari & Ando, Mitsuyo, 2005. "Two-dimensional fragmentation in East Asia: Conceptual framework and empirics," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 317-348.
    8. Takatoshi Ito & Andrew K. Rose, 2005. "International Trade in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_05-1.
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    Cited by:

    1. Mitsuyo ANDO, 2013. "Development and Restructuring of Regional Production/Distribution Networks in East Asia," Working Papers DP-2013-33, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Fukunari Kimura & Ayako Obashi, 2016. "Production Networks in East Asia: What We Know So Far," ADB Institute Series on Development Economics, in: Ganeshan Wignaraja (ed.), Production Networks and Enterprises in East Asia, edition 1, chapter 0, pages 33-64, Springer.
    3. Mitsuyo ANDO & Fukunari KIMURA, 2013. "What Are the Opportunities and Challenges for ASEAN?," Working Papers DP-2013-31, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Mitsuyo Ando, . "Development and Restructuring of Regional Production/Distribution Networks in East Asia," Chapters, in: Zhang Yunling & Fukunari Kimura & Sothea Oum (ed.), Moving Toward A New Development Model For East Asia-The Role of Domestic Policy and Regional Cooperation, chapter 12, pages 367-392, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Mitsuyo Ando & Fukunari Kimura, 2012. "How did the Japanese Exports Respond to Two Crises in the International Production Networks? The Global Financial Crisis and the Great East Japan Earthquake," Asian Economic Journal, East Asian Economic Association, vol. 26(3), pages 261-287, September.
    6. Yang, Yiwen & Lin, Chinho, 2021. "Impact of the “Belt and Road Initiative” on machinery production networks," Economic Modelling, Elsevier, vol. 104(C).
    7. Mitsuyo ANDO, 2013. "Impact of Recent Crises and Disasters on Regional Production/Distribution Networks and Trade in Japan," Working Papers DP-2013-12, Economic Research Institute for ASEAN and East Asia (ERIA).

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