Trade and Industrial Development in East Asia

Trade and Industrial Development in East Asia

Catching Up or Falling Behind

Peter C.Y. Chow

Trade as an engine of growth has played a catalyst role in East Asian development; through vigorous study of performances in past decades, East Asian trade and industrialization experiences may offer some lessons for other developing countries. This book covers trade and industrial structures for ten countries and regions including Japan, China, Hong Kong, Korea, Singapore, Taiwan, Indonesia, Malaysia, the Philippines and Thailand.

Chapter 3: Catching up or Falling Behind Hypothesis II: Trade Competitiveness on Exports by Technology Levels between the Leader and Followers

Peter C.Y. Chow

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


To analyze the role of technology on trade structures, it is necessary to decompose manufactured exports by levels of production technology. The three-digit Standard International Trade Classification (SITC) product code is generally considered to be one of the best measurement units of an industry’s characteristics. Combining the common approach of distinguishing export commodities by “resource-based, labor-intensive, scale-intensive, differentiated and science-based manufactures” with the Organisation for Economic Co-operation and Development (OECD) approach of classifying “technological activity within each category” of product groups, Lall (2000) classified the technological structure of exports into nine categories. Based on the three-digit SITC (revision 2), Lall (2000) classified all trading commodities other than primary products into nine groups, which include two categories of resource-based manufactures (RB1 and 2) and seven categories of different levels of technological intensity, from low level 1 and 2 (LT1, LT2) through medium level 1, 2, and 3 (MT1, MT2, MT3) to high level 1 and 2 (HT1, HT2). Lall’s (2000) classification of export commodities has the advantage of differentiating product characteristics in accordance with both their production technology as well as their factor endowment. This fulfills the purpose of synthesizing the technology and factor proportions theories in this study. The coverage of these nine product groups based on three-digit SITC is reported in Appendix A3.1. 3.1 THE CHANGING COMPOSITION OF EXPORT COMMODITIES It would be interesting to examine the changing composition of export commodities before proceeding with further analysis of the changing 40 CHOW (9781849804820) PRINT.indd 40 24/02/2012 08:31 Catching...

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