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Recent Trade Dynamics in Asia: Examples from Specific Industries

Marc Auboin and Floriana Borino

No 7194, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper looks at the extent to which the shift in the lower value added production to countries in the following development “tier” is actually becoming a reality. Several countries in East Asia have been upgrading production patterns and moving up the value chain, this paper looks at how this helps and offers new opportunities to less advanced countries to integrate in world trade. The paper uses a combination of techniques, from an analysis of disaggregated trade flows by country and sectors, to the calculation of trade intensity indices by country and sector, and value-added trade by sector. It finds combined evidence of forward and backward trade increasing between several neighbouring Asian economies and China, in the most labour-intensive industries in particular. Econometric analysis shows that relative unit labour costs are an explanatory factor of increased trade links. In cases, the intensification of trade links on the export side can relate to a strongly expanding local market (for example India for electronic products such as smartphones), but mostly the intensification of trade links takes place both on the import and export sides with markets which are much smaller than China (Vietnam, Bangladesh, etc.), and which experienced increased outward-processing activities as a result of China's production upgrade.

Keywords: investment; trade policy; business cycles (search for similar items in EconPapers)
JEL-codes: E22 F13 F44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-mac and nep-sea
Date: 2018
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