Recent Trade Dynamics in Asia: Examples from Specific Industries

23 Pages Posted: 6 Nov 2018

See all articles by Marc Auboin

Marc Auboin

World Trade Organization (WTO)

floriana borino

World Trade Organization (WTO)

Date Written: August 23, 2018

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

JEL Classification: E220, F130, F440

Suggested Citation

Auboin, Marc and borino, floriana, Recent Trade Dynamics in Asia: Examples from Specific Industries (August 23, 2018). CESifo Working Paper Series No. 7194, Available at SSRN: https://ssrn.com/abstract=3274570

Marc Auboin (Contact Author)

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

Floriana Borino

World Trade Organization (WTO) ( email )

Rue de Lausanne 154
Geneva 21, CH-1211
Switzerland

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