Fragmentation and East Asia’s Information Technology Trade

Carl Bonham, Byron Gangnes () and Ari Van Assche ()
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Ari Van Assche: Department of Economics, University of California at Davis

No 200409, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper studies the growth and determinants of information technology (IT) trade in the Asia-Pacific region. We argue that the rise of IT trade must be understood within the context o increasing vertical fragmentation of production processes that has occurred over the past two decades. To evaluate this empirically, we estimate a set of pooled bilateral IT export equations for eight Asian countries, the U.S. and the E.U., where FDI inflows are introduced as a proxy for fragmentation. We apply a panel cointegration approach that allows for heterogeneity in short-run dynamics and in fixed effects. Consistent with production fragmentation, we find that the evolution of IT trade can be explained in part by traditional income and relative price effects but also by FDI inflow.

Keywords: fragmentation; information technology; FDI and trade; trade elasticities; panel data (search for similar items in EconPapers)
JEL-codes: C33 F14 F23 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (8)

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http://www.economics.hawaii.edu/research/workingpapers/WP_04-9.pdf First version, 2004 (application/pdf)

Related works:
Journal Article: Fragmentation and East Asia's information technology trade (2007)
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