Global Production Networks in Electronics and Intra-Asian Trade

Abstract

The growth of East Asia's intra-regional trade is driven largely by increased component trade within global electronics production networks. Data on both electronics trade and production elucidate a pattern of specialization in which upper-and middle-income countries produce sophisticated components and lower-income countries assemble lowervalue-added final goods. There is evidence of increasing sophistication within the electronics sector by the Newly Industrialized Economies and to a lesser extent by ASEAN countries. Despite the marked increase in intra-regional trade, developing East Asian countries remain heavily dependent on developed-country markets. When Western export demand rapidly contracted during the 2008-2009 economic crisis, these specialization patterns led the rapid diffusion of the business cycle shock throughout the East Asian region.

Vertical Trade Maps

“…Third, the progressive integration of China with the regional and global production networks during the 1990s, and its leap after accessing the WTO in 2001, induced a whole new wave and dimension of outsourcing and production relocation to the country, which reverberated across the entire region and the world economy (Gangnes, ).…”

“…Third, the progressive integration of China with the regional and global production networks during the 1990s, and its leap after accessing the WTO in 2001, induced a whole new wave and dimension of outsourcing and production relocation to the country, which reverberated across the entire region and the world economy (Gangnes, 2010). Fourth, the rapid expansion of global demand for consumer goods in the period leading up to the 2008-2009 global financial crisis spurred growth, especially in the highly fragmented industries, such as electronics in East Asia.…”

“…Parts and components exports, largely to China, constituted more than half of total exports by East Asian economies positioned further upstream in the value chains linking the region's production networks (Athukorala, ). For example, in 2004, approximately 70 percent of Taipei China's notebook computers were being produced in mainland China (Gangnes, ). Some electronic products incorporate mostly components, design and brands originating outside the exporting country.…”

“…5 The official designation of this ADB Member Country is 'Taipei,China'. being produced in mainland China (Gangnes, 2010). Some electronic products incorporate mostly components, design and brands originating outside the exporting country.…”

Industrial Deepening in Malaysia: Policy Lessons for Developing Countries

“…Numerous studies have shown that manufacturing development foster greater external integration with the world through trade and investment (Gangnes and Assche 2010). However, efforts to deepen manufacturing development have not succeeded in nurturing a critical mass of domestic entrepreneurs with indigenous innovative capacities that can move Malaysia up the value chain of production.…”