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Author: Mizanur Rahman
Publisher:
ISBN:
Category :
Languages : en
Pages : 58
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Book Description
This paper shows that East Asian trade pattern exhibits a dynamic shift in the regional value chain. Several developing Asian economies including China notably gained comparative advantage in the production and exporting of medium-and-high technology products. Japan and the NIEs further deepened their intra-regional comparative advantage across product lines. Nonetheless, the region significantly depends on final demands from the Americas and Europe. The build-up of an unsustainable payment imbalance in the US was substantially mirrored in the reserve accumulation by East Asian countries. Given that a disorderly unwinding of the imbalance is in progress amid the global financial crisis and a fear of prolonged recession, the present study examines how real exchange rate changes and a shift in relative demand will affect exports from the East Asian countries. The findings show that both the real exchange rate change and a shift in relative foreign income would significantly reduce exports from East Asia. The findings further show that with the value chain becoming increasingly fragmented along the production network, changes in the intra-regional exchange rates significantly affect their exports but in an asymmetric way. The implication is that the production network has called for a greater symmetry in their intra-regional real exchange rates. An arrangement whereby East Asian exchange rates converge to relative stability within the region but greater flexibility against others (particularly the US dollar and Euro) would itself be a mechanism for international adjustment.
Author: Mizanur Rahman
Publisher:
ISBN:
Category :
Languages : en
Pages : 58
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Book Description
This paper shows that East Asian trade pattern exhibits a dynamic shift in the regional value chain. Several developing Asian economies including China notably gained comparative advantage in the production and exporting of medium-and-high technology products. Japan and the NIEs further deepened their intra-regional comparative advantage across product lines. Nonetheless, the region significantly depends on final demands from the Americas and Europe. The build-up of an unsustainable payment imbalance in the US was substantially mirrored in the reserve accumulation by East Asian countries. Given that a disorderly unwinding of the imbalance is in progress amid the global financial crisis and a fear of prolonged recession, the present study examines how real exchange rate changes and a shift in relative demand will affect exports from the East Asian countries. The findings show that both the real exchange rate change and a shift in relative foreign income would significantly reduce exports from East Asia. The findings further show that with the value chain becoming increasingly fragmented along the production network, changes in the intra-regional exchange rates significantly affect their exports but in an asymmetric way. The implication is that the production network has called for a greater symmetry in their intra-regional real exchange rates. An arrangement whereby East Asian exchange rates converge to relative stability within the region but greater flexibility against others (particularly the US dollar and Euro) would itself be a mechanism for international adjustment.
Author: Mizanur Rahman
Publisher: CreateSpace
ISBN: 9781514305942
Category :
Languages : en
Pages : 96
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Book Description
In his Testimony on June 23 2005 before the U.S. Senate Committee on Finance, Alan Greenspan, Chairman of the Federal Reserve Board, remarked, "The enhanced integration of China into the world trading system is having notable effect on Asia's trade with the rest of the world and on trade within Asia. After having risen rapidly through the 1990s, U.S. imports from Asia excluding China have flattened since 2000. This has occurred as production within Asia has evolved, with the final stages of assembly and exporting to the United States and elsewhere becoming increasingly concentrated in China." The phenomenon is called East Asian production networks whereby production processes are fragmented across national borders in the region. This development is undeniably related to the global imbalance problem. Several studies showed that the build-up of an unsustainable payment imbalance in the U.S. was substantially mirrored in the reserve accumulation by East Asian countries including China notably. These studies predicted that unless "coordination and shared responsibility" led to a gradual adjustment of it, the world economy would move toward a major crisis. Some authors even predicted an imminent collapse of the U.S. dollar, and a global financial meltdown. A global financial crisis indeed began in 2008. The crisis has accompanied a prolonged economic slowdown across the developed and developing world. An unwinding of the imbalance has progressed but in a disorderly way. The moral of this research is that real exchange rate changes and redistribution of world expenditures will continue to play key role in the process of international adjustment. However, our focus would be on how it would affect East Asian exports within the region and between East Asia and the rest of the world. We apply an empirical framework that essentially incorporates the fact that production within Asia has evolved. The consideration has an important implication. It is that exports by country are recorded on a gross basis rather than as value added and therefore the domestic value added is only a part of the gross value of the exports. An appreciation by the exporting country per se will affect only the domestic value added but not the gross value. But a joint appreciation of countries supplying intermediate goods will increase the dollar cost of intermediate goods imported into the exporting country from the rest of Asia, which represents a significant share of the gross value. This was the conjecture of Alan Greenspan. He argued that such a coordinated exchange appreciation would have larger effect on East Asian exports. In fact, East Asian exchange rates are now on a path of real appreciation but in an environment of no explicit coordination. The question is how changes in intra-regional real exchange rates will affect trade along the production networks and final exports from East Asia to the world. This study defines two channels of this effect. The first is the production linkage effect through fragmented value chain and the other is the competitive effect. A real appreciation of one East Asian country against the others will imply an adverse competitiveness effect but a favorable linkage effect. We further examine in this research the evolving trade patterns of East Asian countries. We do it by analyzing composition as well as comparative advantage of East Asian exports by stages of production and across geographic locations. The purpose is to see how production specialization has evolved across the core and peripheral countries within the region. We conduct the analyses for all East Asian countries and over 1985-2008 period. They include Japan, South Korea, and Taiwan comprising the core region and China and seven ASEAN countries comprising the peripheral region. The ASEAN countries are Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam.
Author: Moon Jung Choi
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
This paper investigates how patterns of vertical specialization in trade among the three major East Asian economies -- China, Japan and Korea -- are shaped, and what the effects of the real exchange rate fluctuations on trade volumes are. We develop a simple two-country model that focuses on the multistage production process, and apply TimeVarying Parameter (TVP) VAR to the countries' bilateral trade data. From our theoretical model, we find two distinct features of vertical specialization where multistage production processes occur: one is that, when a multistage production process exists, an increase in final demand in one country causes both countries' intermediate goods exports to expand; the other is that, if a multistage production process exists in the production of one country's final goods, then real depreciation of the currency in the other country has an amplified effect through the circulating trade chain. In the following empirical analysis, we first find that a multistage production process is prominent in the production of China's final consumption goods. Another finding is that the existence of a multistage production process across two countries, especially Korea and China, strengthens the effect of the real exchange rate on intermediate goods trades through the amplified effect that the theoretical model predicts.
Author: Takatoshi Ito
Publisher: University of Chicago Press
ISBN: 0226379000
Category : Business & Economics
Languages : en
Pages : 431
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Book Description
The practice of trading across international borders has undergone a series of changes with great consequences for the world trading community, the result of new trade agreements, a number of financial crises, the emergence of the World Trade Organization, and countless other less obvious developments. In International Trade in East Asia, a group of esteemed contributors provides a summary of empirical factors of international trade specifically as they pertain to East Asian countries such as China, Japan, Korea, and Taiwan. Comprised of twelve fascinating studies, International Trade in East Asia highlights many of the trading practices between countries within the region as well as outside of it. The contributors bring into focus some of the region's endemic and external barriers to international trade and discuss strategies for improving productivity and fostering trade relationships. Studies on some of the factors that drive exports, the influence of research and development, the effects of foreign investment, and the ramifications of different types of protectionism will particularly resonate with the financial and economic communities who are trying to keep pace with this dramatically altered landscape.
Author: World Trade Organization
Publisher:
ISBN:
Category :
Languages : en
Pages : 128
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Book Description
Author: United Nations Publications
Publisher: UN
ISBN: 9789211207231
Category : Business & Economics
Languages : en
Pages : 132
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Book Description
Recent years has seen a sharp increase in the trade of intermediate goods between ASEAN countries and China, reflecting the emergence of China as a regional 'assembly centre' and sourcing the bulk of parts and components from countries in South-East and North-East Asia in the production of final goods for export to the United States and the European Union. This expansion of trade in intermediates is closely linked to the spread of international production networks (IPNs) in Asia. The expansion raises important new analytical and policy challenges generating rapidly growing literature. This study focuses on how new patterns of production and trade influence the effects of exchange rates on international trade flows of manufactured goods, and draws attention to several ways in which IPNs have altered the nature of international production and trade
Author: Ronald I. McKinnon
Publisher: MIT Press
ISBN: 9780262134514
Category : Business & Economics
Languages : en
Pages : 300
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Book Description
The policy dilemmas inherent in using the US dollar as the key currency for stabilizing exchange rates in East Asia.
Author: Masahiro Kawai
Publisher: World Bank Publications
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 52
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Book Description
A coordinated action by East Asian countries to stabilize their currencies against a common basket of major currencies (broadly representative of their average structure of trade and foreign direct investment) would help stabilize both intraregional exchange rates and effective exchange rates, in a way consistent with the medium-term objective of promoting trade investment and growth in the region.
Author: Sophie Saglio
Publisher: KIEP
ISBN:
Category : East Asia
Languages : en
Pages : 110
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Book Description
Author: Mizanur Rahman
Publisher: CreateSpace
ISBN: 9781514831359
Category :
Languages : en
Pages : 78
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Book Description
Global trade imbalance against China as well as East Asia is an outcome of 'globally integrated business strategy of multinational corporations,' which has led to the development of production networks in East Asia. As an outcome, economic interdependency in East Asia has grown even stronger in relation to its rapid economic growth. It has also been associated with increasing factor mobility and business cycle synchronization across countries within the region. This led me to conjecture that East Asia was an optimum currency area. Nevertheless, the countries have independent national currencies and conduct heterogeneous exchange rate and monetary policies. This provides the setting for this research. This monograph empirically examines if the actual policy environment relative to the optimal choice, in presence of an external shock, can significantly affect East Asian production networks and thereby the pattern of regional trade integration. While the actual policy environment is characterized by heterogeneous exchange rate regimes of East Asian countries, the optimal choice is assumed to be a currency area arrangement whereby the countries either share a single currency or have their exchange rates fixed to one another. It is thereby an ex ante analysis of a potential institutional arrangement. The conceptual framework and empirical methodologies are designed in order to draw valid inference on both the short-run dynamics and the long-run equilibrium relations between exchange rates and exports. It has been applied in the context of China, where final stages of assembly and exporting have become increasingly concentrated. In doing that, the study uses a unique Chinese trade dataset that distinguishes exports that are produced along the production networks from those that are not.
