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Global Value Chains of E ast A sia: Trade in Value Added and Vertical Specialization
Author(s) -
Kwon Taehyun,
Ryou JaiWon
Publication year - 2015
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/asej.12051
Subject(s) - value (mathematics) , economics , international trade , production (economics) , international economics , microeconomics , mathematics , statistics
E ast A sia is known for its high intra‐regional trade of intermediate goods and for its high inter‐regional export of final goods in the manufacturing sector. The present study analyzes how this pattern changed between 1995 and 2009, by focusing on the ratio of value added through export of the intermediate goods with respect to value added induced by total exports ( VSI ) and the ratio of domestic value added due to final demand of the trading partner relative to total exports to that region ( VAX ). Using our new index of vertical specialization, VSI , we examine the extent to which the rise of the C hinese economy has changed E ast A sia's role in the global value chain. Our analysis shows that an increasing visibility of C hina in the global production network has been accompanied by a higher share of intermediate exports, even though C hina's VSI ratio is still lower than that of J apan or K orea. Meanwhile, the VAX ratio has fallen for all three countries in pairwise trade with one another, much faster than in inter‐regional trade with other regions. Vertical specialization has progressed in the major exporting industries in C hina, J apan and K orea. This seems to reflect the strengthening ability of E ast A sia to create value added, in contrast to advanced countries in E urope and N orth A merica.