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Value Content And Production Networks In Southeast Asia: Application Of Afta And Asean‐Plus‐One Fta Formulas

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  • Ikuo KUROIWA

Abstract

Rules of origin are an integral part of all trade rules. To be eligible for Common Effective Preferential Tariffs under the ASEAN Free Trade Area (AFTA) agreement, a product must satisfy the conditions relative to value content. The present paper seeks to calculate value content of industries in Southeast Asia, using the formula specified by the rules of origin in AFTA, the ASEAN–China FTA, the ASEAN–Korea FTA, and the ASEAN–Japan FTA. Moreover, the paper attempts to calculate true value content of industries by applying a simple technique of input–output analysis, and to estimate error margins (i.e., overestimates) in calculating value content. The paper also examines the relationship between value content and production networks. The paper finds that many industries exhibited declines in local content during the period 1990–2000, but that the geographical spread of production networks raised the proportion of inputs supplied by the neighboring ASEAN countries, so that the contribution of the cumulative rule of origin increased.

Suggested Citation

  • Ikuo KUROIWA, 2009. "Value Content And Production Networks In Southeast Asia: Application Of Afta And Asean‐Plus‐One Fta Formulas," The Developing Economies, Institute of Developing Economies, vol. 47(2), pages 147-176, June.
    • Handle: RePEc:bla:deveco:v:47:y:2009:i:2:p:147-176
    DOI: 10.1111/j.1746-1049.2009.00081.x
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    References listed on IDEAS

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    1. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
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    1. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
    2. Kuroiwa, Ikuo, 2015. "Industrial deepening in East Asia," IDE Discussion Papers 489, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Ikuo Kuroiwa & Hiroshi Kuwamori & Hajime Sato, 2011. "The Triangular Trade: The Shock Transmission Mechanism in the Asia-Pacific Region," Chapters, in: Satoshi Inomata (ed.), Asia Beyond the Global Economic Crisis, chapter 1, Edward Elgar Publishing.

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