Linked versus Non-linked Firms in Innovation: The Effects of Economies of Network in Agglomeration in East Asia

This paper proposes a new mechanism linking innovation and network in developing economies to detect explicit production and information linkages and investigates the testable implications of these linkages using survey data gathered from manufacturing firms in East Asia. We found that firms with more information linkages tend to innovate more, have a higher probability of introducing new goods, introducing new goods to new markets using new technologies, and finding new partners located in remote areas. We also found that firms that dispatched engineers to customers achieved more innovations than firms that did not. These findings support the hypothesis that production linkages and face‐to‐face communication encourage product and process innovation.

Shock Transmission Mechanism of the Economic Crisis in East Asia : An Application of International Input-Output Analysis

This paper investigates the impacts of the 2008 economic crisis on industries in East Asia. By using the updated Asian international input-output table for 2008, the paper attempts to identify the transmission mechanism and the magnitude of impact of the crisis on industries in East Asia. The analyses reveal that the crisis significantly affected industrial output of the nine East Asian countries. In particular, the countries which are deeply involved in production networks were affected most seriously. Moreover, the analyses show that the impact was transmitted to East Asian industries considerably through the “triangular trade”, in which China imports parts and components from neighboring East Asian countries and then exports final products to the U.S. and EU markets.

Chapter 4 The Challenges in Developing Realistic NEG Simulation Models for East Asia

This chapter attempts to identify some important issues in developing realistic simulation models based on new economic geography, and it suggests a direction for solving the difficulties. Specifically, adopting the IDE Geographical Simulation Model (IDE-GSM) as an example, we discuss some problems in developing a realistic simulation model for East Asia. The first and largest problem in this region is the lack of reliable economic datasets at the sub-national level, and this issue needs to be resolved in the long term. However, to deal with the existing situation in the short term, we utilize some techniques to produce more realistic and reliable simulation models. One key compromise is to use a 'topology' representation of geography, rather than a 'mesh' or 'grid' representation or simple 'straight lines' connecting each city which are used in many other models. In addition to this, a modal choice model that takes into consideration both money and time costs seems to work well.

Location choice in low-income countries : evidence from Japanese investments in East Asia

Unlike most existing studies, this paper examines the location choices of MNEs in developing countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model at the province level. Noteworthy results of location elements are as follows. As is consistent with the mechanics of cheap labor-seeking FDI, Japanese MNEs are more likely to invest in locations with low income and low tariff rates on products from Japan. Also, accessibility to other locations and/or ports matters in attracting Japanese MNEs because it is crucial in importing materials and exporting their products. In addition, WTO membership and bilateral investment treaties are important because these contribute to the settlement of trade and investment disputes, which is more likely to be necessary in developing countries.

Production networks in the Asia-Pacific region : facts and policy implications

Production networks have been extensively developed in the Asia-Pacific region. This paper employs two micro-level approaches, case studies and econometric analysis, using JETRO's firm surveys which investigate Japanese affiliates operating in Southeast Asia. These two approaches found that production networks have extended, involving suppliers, across various nations in the Asia-Pacific region, and that production bases in host and home countries have different roles. A home country serves as a headquarters with services such as R&D, international marketing, and financing. A high tariff policy in a host country may foster domestic industries through the expansion of procurement from domestic suppliers, either indigenous or foreign, but it may discourage a country from becoming an export platform.

Promoting institutional connectivity in the Asia Pacific region : a study of supply chain and trade in services

This paper analyzes "institutional connectivity", or the degree of seamless trade in services centering on the distribution sector. Foreign equity participation in mode 3 (commercial presence) of trade in services and business firms’ investment performance has been studied closely. Net economic benefits of transparent institutional connectivity in the wholesale sector have also been revealed statistically in the case of Japan’s bilateral FTAs with other APEC members. Given these results, APEC could work on establishing its own harmonized "service trade commitment table" with only the foreign capital participation as its simple policy restriction. This would surely enhance an APEC-wide, institutional supply chain connectivity.

Industrial deepening in East Asia

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.

What best transfers knowledge? : capital, goods, and innovative labor in East Asia

This paper compares three knowledge carriers—trade, foreign direct investment (FDI), and inventors—as knowledge mediums, and investigates their effects on knowledge flow in East Asia from 1996 to 2010. Using patent citations as a proxy for knowledge flow, this paper shows that FDI and inventor mobility have positive effects on increasing patent citations in East Asia when the technological portfolios of two countries are less similar. While trade shows statistical significance, the effect is inconsistent according to the regression models.

Descriptive analysis of the knowledge network formation in East Asia

This paper shows descriptively how the knowledge network in East Asia has been formed. In addition, the correlation between the knowledge network and economic growth is also examined. Evidence is provided to show that plugging into the knowledge network of developed countries could be a key for increasing innovativeness in a country.

The supply chain in East Asia

East Asia is a major tea-consuming and -producing area; however, few studies have examined the East Asian tea industry from the perspective of the supply chain. Based on field and desktop studies of the tea markets in Taiwan and China, this paper provides an overview of each market together with detailed case studies. In this analysis, the characteristics of the tea industry and the main problems in the current supply chain in terms of governance, upgrading, and food safety and quality control are identified. This paper will help fill the gap in studies of the East Asian tea industry from the perspective of the supply chain.