Understanding the Flow of Electronic Parts and Components in East Asia

Author Name Willem THORBECKE (Senior Fellow, RIETI)
Creation Date/NO. June 2016 16-E-072
Research Project East Asian Production Networks, Trade, Exchange Rates, and Global Imbalances
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This paper investigates East Asia's exploding trade in electronic parts and components (ep&c). The results indicate that foreign direct investment (FDI) increases the level of ep&c exports. Thus, FDI has promoted the slicing up of the value chain in the region. Higher capital intensity increases the share of a country's ep&c exports relative to its Asian trading partners. Thus, one reason why South Korea and Taiwan have gained market share is because they have invested heavily in plant, equipment, and technology. Exchange rate depreciations significantly increase both the level and the share of a country's ep&c exports. This implies that regional exchange rate stability may reduce beggar-thy-neighbor policies and promote intra-regional trade.

Published: Thorbecke, Willem, 2016. "Understanding the flow of electronic parts and components in East Asia," Korea and the World Economy, Vol. 17(2), pp. 161-182