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Recent trade dynamics in Asia: Examples from specific industries

Author

Listed:
  • Auboin, Marc
  • Borino, Floriana

Abstract

This paper looks at the extent to which the shift in the lower value added production to countries in the following development "tier" is actually becoming a reality. Several countries in East Asia have been upgrading production patterns and moving up the value chain, this paper looks at how this helps and offers new opportunities to less advanced countries to integrate in world trade. The paper uses a combination of techniques, from an analysis of disaggregated trade flows by country and sectors, to the calculation of trade intensity indices by country and sector, and value-added trade by sector. It finds combined evidence of forward and backward trade increasing between several neighbouring Asian economies and China, in the most labour-intensive industries in particular. Econometric analysis shows that relative unit labour costs are an explanatory factor of increased trade links. In cases, the intensification of trade links on the export side can relate to a strongly expanding local market (for example India for electronic products such as smartphones), but mostly the intensification of trade links takes place both on the import and export sides with markets which are much smaller than China (Vietnam, Bangladesh, etc.), and which experienced increased outward-processing activities as a result of China's production upgrade.

Suggested Citation

  • Auboin, Marc & Borino, Floriana, 2018. "Recent trade dynamics in Asia: Examples from specific industries," WTO Staff Working Papers ERSD-2018-04, World Trade Organization (WTO), Economic Research and Statistics Division.
  • Handle: RePEc:zbw:wtowps:ersd201804
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    File URL: https://www.econstor.eu/bitstream/10419/176769/1/1017744580.pdf
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    References listed on IDEAS

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    1. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Hiau Looi Kee & Heiwai Tang, 2016. "Domestic Value Added in Exports: Theory and Firm Evidence from China," American Economic Review, American Economic Association, vol. 106(6), pages 1402-1436, June.
    4. Gladys Lopez Acevedo & Raymond Robertson, 2016. "Stitches to Riches? Apparel Employment, Trade, and Economic Development in South Asia," Working Papers id:10650, eSocialSciences.
    5. Drysdale, Peter, 1969. "Japan, Australia, New Zealand: The Prospect for Western Pacific Economic Integration," The Economic Record, The Economic Society of Australia, vol. 45(111), pages 321-342, September.
    6. Kojima, Kiyoshi, 1964. "The Pattern of International Trade Among Advanced Countries," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 5(1), pages 16-36, June.
    7. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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    More about this item

    Keywords

    investment; trade policy; business cycles;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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