Trade Integration in East Asia : The Role of China and Production Networks
Production networks have been at the heart of the recent growth in trade among East Asian countries. Fragmentation trade, reflected mainly in the trade in parts and components, is expanding more rapidly than the conventional trade in final goods. T...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/03/7436019/trade-integration-east-asia-role-china-production-networks http://hdl.handle.net/10986/7185 |
| Summary: | Production networks have been at the
heart of the recent growth in trade among East Asian
countries. Fragmentation trade, reflected mainly in the
trade in parts and components, is expanding more rapidly
than the conventional trade in final goods. This is mainly
due to the relatively more favorable policy setting for
international production, agglomeration benefits arising
from the early entry into this new form of specialization,
considerable intercountry wage differentials in the region,
lower trade and transport costs, and specialization in
products exhibiting increasing returns to scale. The
economic integration of China has deepened production
fragmentation in East Asia, countering fears of crowding out
other countries for international specialization.
International production fragmentation in East Asia has
intensified intraregional trade but has depended heavily on
extraregional trade in final goods. While production
networks centered on China have contributed significantly to
growth in East Asia, they also breed vulnerabilities. They
have not automatically led to technology spillovers and have
led to an extreme interdependence across East Asian countries. |
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