A World Trade Organization for the 21st Century

A World Trade Organization for the 21st Century

The Asian Perspective

ADBI series on Asian Economic Integration and Cooperation

Edited by Richard Baldwin, Masahiro Kawai and Ganeshan Wignaraja

The global financial crisis exposed great shortcomings in the global economic architecture, generating extensive international debate about possible remedies for these deficiencies. The postwar global architecture was guided by major developed economies, centered around the IMF, the GATT, and the World Bank. Today, the balance of economic power is shifting toward emerging economies. Global governance and economic policy must reflect this shift. With contributions from prominent Asian and international trade experts, this book critically examines key changes occurring in the world trading system and explores policy implications for Asia.

Chapter 4: Joining the supply chain: a firm-level perspective

Ganeshan Wignaraja

Subjects: asian studies, asian development, asian economics, economics and finance, asian economics, international economics

Extract

Global production networks and supply chains (hereafter, supply chains) have transformed Asia in recent decades (Baldwin 2013). Joining supply chains has been a fast-track route for some Asian economies to industrialize and achieve unprecedented prosperity. Adopting outward-oriented policy reforms have facilitated entry into supply chains. Rising inequality is a problem in Asia and greater participation of SMEs in supply chains supports more inclusive growth (Lim and Kimura 2010). Increasing attention has focused on measuring the magnitude of supply chain trade through trade in parts and components and trade in value added (for example, Ng and Yeats 2003; Koopman et al. 2010; Athukorala 2011; WTO and IDE-JETRO 2011). However, little micro-level work exists on supply chains in Asia. The behavior of large firms and SMEs in supply chains in Asia thus largely remains a mystery. This chapter studies the supply chain from the unique micro-level perspective of the firm. It undertakes a comparative and firm-level analysis of factors influencing joining supply chains in Southeast Asian economies. The research aims to improve our understanding of the micro-level behavior of firms in supply chains and contribute to the handful of empirical studies on Asia. The main focus of the research is a firm-level econometric investigation of why some firms have been better able to join supply chains than others. This investigation draws on recent literature emphasizing the notion of heterogeneity of firms and highlights key enterprise characteristics (for example, firm size, technological capabilities, skills, and access to finance) underlying success.

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