The evolving geography of production hubs and regional value chains across East Asia: Trade in value-added

Abstract

The interdependence of regional trade and production networks has important implications for national prosperity, regional stability and the internationalization of production. We ask: What are the locational patterns of trade in value-added in East Asia and how are these patterns changing over time? The disintermediation of value chains and the externalization of business activity create hubs of capability and extend value chains between countries. We adopt input-output techniques to analyze the evolution of production networks in East Asia over the period 1990-2005 from a value chain perspective. A high density of cross-border interaction is reported alongside changing geographic dynamics, and an informal integration derived from intermediates trade in value-addition. The locational interdependence of developed and less-developed countries across the region leverages on the heterogeneity of location-specific advantages within the region.