Decomposing structural changes of production network for electronics industry in Northeast Asia regions in the 2010s

This article analyzes structural changes of regional production network (RPN) for the electronics industry across 20 Northeast Asia regions for the period 2005–2015. We develop an extended Structural Decomposition Analysis approach which decomposes changes in Vertical Specialization (VS) share into seven components of foreign intermediate suppliers, input composition, and import intensity in terms of the import structure; and production structure, trade balance, trade openness, and domestic demand in terms of the export one. The development of production fragmentation in Northeast Asia’s electronic industry was associated with the coexistence of nine subregional patterns, including four VS patterns of Coastal China, Inland China, North China, and Central China; four vertical integration (VI) patterns of Northeast Japan, Central Japan, Seoul region, and Busan region. The substantial increases in the VS of North China and Central China result from changes in domestic demand and production structure, while the decline in the VS in Central Japan and Busan region is influenced by the shifts in import intensity and trade openness.