Trajectory of Southeast Asian Production Fragmentation

David Christian and Lili Yan Ing
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Lili Yan Ing: Economic Research Institute for ASEAN and East Asia (ERIA)

No DP-2025-01, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: This paper examines recent trends in production fragmentation within ASEAN’s manufacturing sector in the context of shifting global trade dynamics and rising economic nationalism. Using the OECD’s Trade in Value Added (TiVA) database, we construct two key indicators: (i) the input fragmentation ratio (FRI), which measures overall reliance on intermediate inputs, and (ii) the import fragmentation ratio (FRM), which captures the extent of cross-border input sourcing. Our analysis reveals that, unlike North America and Europe, ASEAN has not experienced a decline in input fragmentation since the Global Financial Crisis (GFC). However, signs of import defragmentation have emerged since 2010. We also find notable variation in fragmentation patterns across countries and industries. These results highlight the need for further research into the drivers of these trends, including investment and production relocation to ASEAN, market positioning, industry specialisation, and technological factors.

Keywords: production fragmentation; global value chains (GVCs); manufacturing in ASEAN and East Asia; supply chain resilience (search for similar items in EconPapers)
JEL-codes: F14 F61 L23 O14 (search for similar items in EconPapers)
Date: 2025-05-30
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