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Industrial deepening in East Asia

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  • Kuroiwa, Ikuo

Abstract

Structural transformations are an indispensable element of sustained economic growth. Within the context of East Asia, this study focuses on industrial deepening, which refers to the formation of local linkages and the creation of a robust local supplier base. To investigate the progress of industrial deepening, this study introduces two kinds of domestic procurement measures in addition to the previously developed local content measures. Specifically, two kinds of vertical specialization measures are used to demonstrate the degree to which respective East Asian economies are specialized within their vertical production networks. The results clearly show that the advancement of production networks is likely to reduce domestic procurement ratios, even if local supplier bases are strengthened in the respective countries. Moreover, the trend of domestic procurement ratios differs depending on the characteristics of particular industries and the industrial policies adopted by individual countries.

Suggested Citation

  • Kuroiwa, Ikuo, 2015. "Industrial deepening in East Asia," IDE Discussion Papers 489, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper489
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    References listed on IDEAS

    as
    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Yean, Tham Siew & Heng, Loke Wai, 2011. "Industrial Deepening in Malaysia: Policy Lessons for Developing Countries," Asian Development Review, Asian Development Bank, vol. 28(2), pages 88-109.
    3. 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.
    4. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
    5. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    6. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2014. "How rich countries became rich and why poor countries remain poor: It's the economic structure…duh!," Japan and the World Economy, Elsevier, vol. 29(C), pages 46-58.
    7. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    8. repec:hhs:iuiwop:430 is not listed on IDEAS
    9. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    10. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
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    Cited by:

    1. Marcato, Marilia Bassetti & Dweck, Esther & Montanha, Rafael, 2022. "The densification of Chinese production chains in the context of vertically fragmented production," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 75-89.
    2. Toshitaka GOKAN & Ikuo KUROIWA & Nuttawut LAKSANAPANYAKUL & Yasushi UEKI, 2015. "Spatial Patterns of Manufacturing Agglomeration in Cambodia, Lao People’s Democratic Republic, and Thailand," Working Papers DP-2015-68, Economic Research Institute for ASEAN and East Asia (ERIA).
    3. Gokan, Toshitaka & Kuroiwa, Ikuo & Laksanapanyakul, Nuttawut & Ueki, Yasushi, 2016. "Spatial structures of manufacturing clusters in Cambodia, Lao People's Democratic Republic, and Thailand," IDE Discussion Papers 617, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Ikuo Kuroiwa, 2017. "The Automotive Value Chain in Thailand," Working Papers DP-2016-33, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    East Asia; Industry; Industrial policy; Input-output tables; Industrial deepening; Production networks; Input-output analysis;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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