The value chain transition in East Asian production networks– The view from value-added decomposition of gross exports

• Main Authors: Hong-Linh Dinh, 丁宏凌
• Other Authors: Shih-Mo Lin
• Format: Others
• Language: en_US
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/75216450712417561758

博士 === 中原大學 === 商學博士學位學程 === 103 === ABSTRACT East Asia’s production networks have been well documented in the academic literature, however most of the previous studies were based on gross trade statistics. These statistics double count intermediates when they cross multiple national borders before being embodied in the final goods. This may lead to estimation bias, and give an inaccurate account of value-added distribution in East Asia’s production chains. Therefore, our understanding of the real trade in value-added among East Asian economies needs to be revisited. This study aims to more accurately describe the transition of international value chains for the first time by taking double-counted terms into account. Using time-series data from World Input-Output Database (WIOD) and applying Wang et al.’s (2013) methodology, the study decomposes the gross exports of six East Asian economies to 16 components of value-added over a 17-year period. The analyses are conducted at the country-aggregate and country-sector levels, focusing on the Electrical and Optical Equipment industry since it has the largest share in East Asia’s exports. Japan still dominates in the upstream of international production chains, but Taiwan and South Korea are catching up by becoming major suppliers of intermediate inputs to the region. Taiwan, South Korea, Japan, and Indonesia used to export most of their value-added to outside regions but have gradually shifted its destination to East Asia. East Asia has been increasingly using more value-added from these four economies before re-exporting those products to the world, an indicator of their growing integration. I also focus on the bilateral trade relationship between Taiwan and South Korea, specifically on their cooperation and competition. The results are presented at the bilateral-aggregate level and bilateral-sector level of Electrical and Optical Equipment industry. Both economies are increasing their dependence on each other in their export production. Taiwan used to have a clear advantage over South Korea in their competition for the Chinese domestic and export production until around 2002, in both the aggregate level and sector of Electrical and Optical Equipment. South Korea has since overtaken or neutralized Taiwan’s advantage, implying that Taiwan needs to perform better in its business with China to reclaim its leading position.