Production Networks in East Asia: Strategic Behavior By Japanese and U.S. Firms

43 Pages Posted: 23 Apr 2007

See all articles by Mitsuyo Ando

Mitsuyo Ando

Hitotsubashi University - Faculty of Economics

Sven W. Arndt

Claremont McKenna College - Robert Day School of Economics and Finance

Fukunari Kimura

Keio University - Faculty of Economics

Date Written: August 2006

Abstract

The rapid growth of international trade in recent decades has been widely documented. It has been accompanied by transformation of the composition of trade and patterns of trade. This is especially the case for "intra-product" trade and the rise of cross-country production networks. With the aid of newly available data, this paper documents and assesses the production-sharing operations of Japanese and U.S. multinationals in East Asia and Latin America. Vertical FDI flows from both countries into East Asia have grown rapidly along with trade in parts and components, while multinational activities in Latin America have continued along more traditional lines of horizontal investment and trade, designed mainly to serve local markets. This evolution towards new forms of organization and behavior has important implications for economic growth and development in emerging economies and for the welfare in all participating nations.

Keywords: Fragmentation, production networks, vertical integration, multinationals

JEL Classification: F14, F21, F23

Suggested Citation

Ando, Mitsuyo and Arndt, Sven W. and Kimura, Fukunari, Production Networks in East Asia: Strategic Behavior By Japanese and U.S. Firms (August 2006). Available at SSRN: https://ssrn.com/abstract=981769 or http://dx.doi.org/10.2139/ssrn.981769

Mitsuyo Ando

Hitotsubashi University - Faculty of Economics

Tokyo, 186-8601
Japan

Sven W. Arndt (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

Fukunari Kimura

Keio University - Faculty of Economics ( email )

2-15-45 Mita, Ninato-ku
Tokyo 1088345
Japan

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