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Production Fragmentation and Trade Integration: East Asia in a Global Context

Prema-chandra Athukorala and Nobuaki Yamashita

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper examines the implications of international production fragmentation for analysing global and regional trade patterns, with special emphasis on countries in East Asia. It is found that, while 'fragmentation trade' has generally grown faster than total world manufacturing trade, the degree of dependence of East Asia on this new form of international specialisation is proportionately larger compared to North America and Europe. International production fragmentation has certainly played a pivotal role in continuing dynamism of the East Asian economies and increasing intra-regional economic interdependence. There is, however, no evidence to suggest that this new form of international exchange has contributed to lessoning the regions dependence on the global economy. On the contrary, growth dynamism based on vertical specialisation depends inexorably on extra-regional trade in final good, and this dependence has in fact increased over the years.

Keywords: production fragmentation; vertical specialisation; regional integration (search for similar items in EconPapers)
JEL-codes: F15 F23 O53 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2005
New Economics Papers: this item is included in nep-int and nep-sea
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Citations: View citations in EconPapers (17)

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