Input Trade and Production Networks in East Asia

Input Trade and Production Networks in East Asia

Edited by Daisuke Hiratsuka and Yoko Uchida

Intermediate input trade is regarded as an important contributory factor in explaining the increase in world trade in recent years. This timely book presents, for the first time, meticulous empirical analyses of the growth of input trade, and includes detailed studies that capture the main features and characteristics of production networks in East Asia.

Preface

Edited by Daisuke Hiratsuka and Yoko Uchida

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

Extract

One of the most prominent features of world trade in recent decades has been a rapid growth in trade in intermediate goods. In East Asia, intermediate input trade has grown markedly and at a rate much faster than that of the world average. It follows that this has led to an increase in East Asia’s share of world intermediate input trade. In the context of this remarkable growth, since the early 1990s East Asia as a region has developed production networks in the manufacture of various products where production processes are divided into several stages, and the outcome has been the emergence of sequential production blocks that are separately located across countries, according to comparative advantage in various factors. As a consequence of the development of sequential production, intermediate goods are traded among the countries in the region so as to produce final products. This mechanism has brought about a notable expansion of intermediate trade in East Asia. Yet despite this phenomenon, so far there have been no rigorous studies on intermediate input trade and production networks within the region. In particular, the causes and extent of intermediate input trade and the resulting production networks in East Asia remain unclear. In 2006, the Institute of Developing Economies (IDE) initiated a two-year project, entitled ‘Vertical Specialization and Economic Integration in East Asia’. Its aim is to undertake for the first time rigorous empirical analyses of the growth of intermediate input trade as well as detailed studies that capture the main features...