Premium
Trade Diversification and Crisis Transmission: A Case Study of T hailand
Author(s) -
Cheewatrakoolpong Kornkarun,
Manprasert Somprawin
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.12080
Subject(s) - economics , diversification (marketing strategy) , financial crisis , international economics , subprime crisis , transmission channel , monetary economics , international trade , transmission (telecommunications) , macroeconomics , business , marketing , electrical engineering , engineering
The international trade literature suggests trade concentration is an important factor in the amplification of the global financial crisis. However, the relationship between trade concentration and transmission of the subprime crisis is empirically weak. T hailand is one of the countries with declining reliance on the advanced economies, yet it was greatly affected by the recent crisis. This might result because the formation of global supply chains creates both direct and indirect trade linkages. In this paper, the authors include the effects of both linkages to examine their connection to the transmission of external shocks, as experienced by the T hai economy. If total trade linkages are calculated, Thailand is still found to be highly exposed to advanced markets. Simulation using a computational general equilibrium model also indicates that the country was seriously affected by the financial crisis through indirect channels.