Formation of production networks in ASEAN: Measuring the real value-added and identifying the role of ASEAN countries in the world supply chains
- 1. Faculty of Economics and Business, Airlangga University, Surabaya, Indonesia
Description
This study addresses the two-fold question of whether the integration-liberalization process of ASEAN is headed towards the creation of a single production base region, and how ASEAN links with other trade blocks. It looks into the degree of intra-ASEAN and extra-ASEAN vertical integration vis-à-vis North America, East Asia, and the European Union through the measurement of value-added creation-absorption in global value chains (GVC) and by locating ASEAN within vertical structures. The study employs an international input-output database and breaks up gross exports into different components of value-added using data from 1997, 2004, and 2012. ASEAN has made significant gains in integrating with East Asia. However, ASEAN as a single production region has gained little, and even lost share in value-added trade with NAFTA and Europe. The truth is that ASEAN has a stronger role across the GVC as a supplier of intermediate goods (33%) than as a supplier of final goods (30%). Vertical structures represent more than 43% of ASEAN gross exports, but it still depends on foreign parts and components (35%) to produce its exports. It may be argued that ASEAN 6, which entails a wider scope of integration, might offer larger benefits to the ASEAN project.
Files
18_BEH_Vol13_Issue2_2017_Esquivias-Padilla_et_al_Formation_of_production_networks_in_ASEAN_pp.237-255.pdf
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