The Effect of the Network Structure and Nature of International Production Chains (IPCs) on East Asia’s Trade in Automobile Industry
Keywords:
Network structure, International Production Chains, East Asia, Automobile Industry, Gravity model.Abstract
This study sought to examine the effect of network structure and nature of IPCs on bilateral trade, with a specific focus on the automobile industry using the panel data methodology. Using the data, a deeper understanding of the determinants behind the development of East Asia’s IPCs in several ways. Firstly, apart from the economic size of the exporting and importing nations, distance, per capita income, FTA, government policies, language, and FDI, it was found that the network structure and the network nature also played a significant role in determining the level of East Asia’s trade in the automobile industry. Specifically, a nation with a high degree of trade integration with its trading partners in IPCs appeared to be poised to increase its exports and imports of automobile products, and the same can be said of a nation with a high dominating power in IPCs. Secondly, it was also found that network structure had an impact on determining the level of automobile trade when we considered in our analysis a nation’s position in the IPCs. In particular, even though both “middle” and “bottom” nations may become the main importer of automobile parts and components (APC), the amount of APC imported from their partner(s) may be different. This could be the result of “middle” nations importing APC for export and domestic use, while “bottom” nations imported these products for local demands only. To improve on the added value from the IPCs as well as to stimulate trade in this region, some suggestions were provided regarding policies for the nations under study.
Downloads
References
Athukorala, P.C., Production Networks and Trade Patterns in East Asia. Manila: Asian Development Bank Working Paper Series on Regional Economic Integration, 2010(56): p. 11-18. DOI: https://doi.org/10.1016/j.najef.2006.07.002.
Kimura, F. and M. Ando, Two-dimensional fragmentation in East Asia: Conceptual framework and empirics. International Review of Economics & Finance, 2005. 14(3): p. 317-348 DOI: https://doi.org/10.1016/j.iref.2004.12.005.
Kimura, F. and A. Obashi, Production networks in East Asia: What we know so far. Production Networks and Enterprises in East Asia, 2016. 2(4): p. 33-64 DOI: https://doi.org/10.1007/978-4-431-55498-1_3.
Athukorala, P.-c. and N. Yamashita, Production fragmentation and trade integration: East Asia in a global context. The North American Journal of Economics and Finance, 2006. 17(3): p. 233-256.
Kimura, F., International production and distribution networks in East Asia: Eighteen facts, mechanics, and policy implications. Asian Economic Policy Review, 2006. 1(2): p. 326-344 DOI: https://doi.org/10.1111/j.1748-3131.2006.00039.x.
Ernst, D., From partial to systemic globalization: international production networks in the electronics industry, paper No 98, 13-19. 1997.
Head, K., Gravity for Beginners. Saggio presentato alla Conferenza: Rethinking the Line: The Canada-US Border Conference. Vancouver. British Columbia, 2003. 22: p. 14-18.
Kimura, F., Y. Takahashi, and K. Hayakawa, Fragmentation and parts and components trade: Comparison between East Asia and Europe. The North American Journal of Economics and Finance, 2007. 18(1): p. 23-40 DOI: https://doi.org/10.1016/j.najef.2006.12.002.
Shepherd, B., Trade costs and facilitation in APEC and ASEAN: delivering the goods? 2010. 3(5): p. 1-10.
Abdul-Aziz, S.N., et al., The Determinations of East Asia¡¯ s Automobile Trade Using a Gravity Model. Research in World Economy, 2019. 10(5): p. 113-128 DOI: https://doi.org/10.5430/rwe.v10n5p113.
Cheng, I.H. and H.J. Wall, Controlling for heterogeneity in gravity models of trade and integration,No. 1999-010). 2004.
Zhang, W.-B., Growth, Residential Distribution, and Land Price in an Integrated Solow’s Growth and Alonso’s Residential Model. Asian Themes in Social Sciences Research, 2018. 2(1): p. 23-31 DOI: https://doi.org/10.33094/journal.139.2018.21.23.31.
Hasson, J.A., Shaping the world economy: suggestions for an international economic policy. 1964, JSTOR.p. 327-330.
Pöyhönen, P., A tentative model for the volume of trade between countries. Weltwirtschaftliches Archiv, 1963. 90(1): p. 93-100.
Sawyer, J.A., An Econometric Study of International Trade Flows. By Hans Linnemann. Amsterdam: North-Holland Publishing Company. 1966. Pp. xiv, 234. Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique, 1967. 33(4): p. 633-634 DOI: https://doi.org/10.2307/140051.
Frankel, J.A. and S.-J. Wei, 7. Regionalization of World Trade and Currencies: Economics and Politics, in The regionalization of the world economy. 2007, University of Chicago Press. p. 189-226.
Athukorala, P.-c., Production networks and trade patterns in East Asia: Regionalization or globalization? Asian Economic Papers, 2011. 10(1): p. 65-95 DOI: https://doi.org/10.1162/ASEP_a_00045.
Anderson, J.E., A theoretical foundation for the gravity equation. The American economic review, 1979.69(1): p. 106-116.
Bergstrand, J.H., The generalized gravity equation, monopolistic competition, and the factor-proportions theory in international trade. The review of economics and statistics 71(1), 1989: p. 143-153 DOI: https://doi.org/10.2307/1928061.
Frankel, J.A., Front matter, The Regionalization of the World Economy, in The Regionalization of the World Economy. 1998, University of Chicago Press. p. 0-12.
Helpman, E., Imperfect competition and international trade: Evidence from fourteen industrial countries. Journal of the Japanese and international economies, 1987. 1(1): p. 62-81 DOI: https://doi.org/10.1016/0889-1583(87)90027-X.
Evenett, S.J. and W. Keller, On theories explaining the success of the gravity equation. Journal of political economy, 2002. 110(2): p. 281-316 DOI: https://doi.org/10.1086/338746.
Cardinale, I. and R. Scazzieri, Political economy: Outlining a field, in The Palgrave handbook of political economy. 2018, Springer. p. 1-25.
Gehlhar, M., Reconciling bilateral trade data for use in GTAP. GTAP Technical papers, 1996. 3: p. 1-11.
Lall, S., M. Albaladejo, and J. Zhang, Mapping fragmentation: electronics and automobiles in East Asia and Latin America. Oxford Development Studies, 2004. 32(3): p. 407-432 DOI: https://doi.org/10.1080/1360081042000260601.
Abdul-Aziz, S.N., P. Allanson, and D. Petrie, International production networks: the automobile industry in East Asia. International Journal of Trade and Global Markets, 2013. 6(4): p. 356-373 DOI: https://doi.org/10.1504/IJTGM.2013.056731.
Khan, A.B., et al., Financial Innovation, Sustainable Economic Growth, and Credit Risk: A Case of the ASEAN Banking Sector. Front. Environ. Sci, 2021. 9: p. 729922 DOI: https://doi.org/10.3389/fenvs.2021.729922.
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Author
This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
