Globalisation and Regional Integration: A Study of International Production Networks

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Globalisation and Regional Integration A Study
of International Production Networks

• Bo MENG (IDE-JETRO/OECD)
• Norihiko YAMANO (OECD)
• Shiguang ZHU (SUPELEC)
• Satoshi INOMATA (IDE-JETRO)
• 21/10/2009 CEPII

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Background

• Due to increasing economic globalisation and
  deepening political relationships, regional
  integration in Europe, North America has
  undergone remarkable progress in the last
  decades. How about Asian region?
• Whole Asian region does not form a custom union,
  but the economy has been apparently integrated in
  terms of production networks.

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Changes in Trade Hubs
US30
JP12
CN3
DE30
Linkage Export share more than 10 (2000)
4
US21
JP8
DE27
CN11
Linkage Export share more than 10 (2007)
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Demand and Supply Centers (total goods)(export
share more than 10 )
Demand Center
Supply Center
of Countries
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Trade data versus International Input-Output
(I-O) Data

• Trade data provides intuitive understanding of
  globalisation and regional integration, but
  international production networks can not be
  considered explicitly.
• Internationally linked I-O data enables us to
  capture both the direct and indirect linkages
  among industries in cross-national production
  networks.
• OECD I-O Database (95,00,05, 42 economies 48
  sectors)
• IDE-JETROs Asian International I-O Tables
• (1975,85,90,95,2000,2008, 10 economies, 76
  sectors)
• updated table

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Import contents (Hummels VS)
Consumer expend. GFCF(38552 M)
Automobiles(5076 M)
Import contents (VS)
RoW 284M

Machinery(45.0 M)

6.7M
Row 0.4M
Am (I-Ad)-1 Export
Source IDE Asian I-O 2000
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Import contents by partner share(Europe)
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Import contents by partner share(North America
and Asia)
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Trade Structure and its Change in Asian Region
(Based on the trade in Intermediate Goods)
1990
2008
From
To
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Inter-country backward linkages in Asian Region
(Based on International Leontief Inverse)
2008
1990
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International trade clustered or dispersed in
terms of geographical proximity ?

• Economic Concentration Index (ECI)
• Standard Deviation / Mean
• a normalized measure of dispersion of a
  probability distribution.

Pattern (1) Pattern
(2)
ECI (1) gt ECI (2)
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ECI Index of Bilateral Trade vs. International
I-O Data (Asian 9 countries)
Backward Linkages Based on I-O Data
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Vertical Specialisation (VS) Asian-USA Region
-10
-21
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Summary

• Asian regional integration has undergone
  remarkable development from both direct (trade)
  and indirect (inter-county effects) perspectives.
  
• China's emerging economic relationship with
  Southeast Asia gives a big impact on this region
  from the viewpoint of production networks.
• Extensions
• Improvement of the Economic Concentration Index.
• Develop a new indicator of Economic Cluster to
  show the changing pattern of geographical
  proximity among countries.