A New Measurement for International Fragmentation of the Production Process: An International Input-Output Approach

The paper investigates the possibility of constructing a new measurement for analysing international fragmentation of the production process. It asserts that the current usage of relevant data, whether the trade shares of parts and components or the index of Vertical Specialisation, is quite unsatisfactory for measuring the phenomenon, since they critically lack the overall perspective of the entire structure of production chains. 　The new measurement is formulated such that it captures every aspect of the vertical sequence of production linkages. It is based on the input-output model of Average Propagation Lengths, recently developed by Eric Dietzenbacher and others, which show the average number of production stages that are passed through for an exogenous change in one industry to affect another. By applying this model to the data of the Asian International Input-Output Tables, the index is able to measure the international dimension of production sharing and division of labour in East Asia.

International Competitiveness of Manufacturing Firms in sub-Saharan Africa

As the success of East Asian countries has shown, labor-intensive industry is recognized to lead economic growth in the early stages of development, utilizing relatively low labor costs. This same growth process has already started in South and South East Asian LDCs since the mid-1990s. However, the manufacturing sector in sub-Saharan Africa has been underdeveloped and manufacturing exports, in particular labour-intensive goods, have stagnated. This paper investigates the international competitiveness of the African manufacturing sector and its determinants through an analytical survey of empirical studies and a comparison with Asian low income countries. Empirical evidences indicate that primary factors of competitiveness, namely productivity, labour cost and exchange rate are unfavorable in sub-Saharan Africa. Representative arguments attribute the weak competitiveness to problems in the business environment, factor endowment, and the exchange rate. However, careful review shows that labour cost is beyond the range explained by endowment and misalignment of exchange rates have been reduced in Africa. Moreover, comparison with Asian low income countries which have competitiveness in labour-intensive goods shows no difference in the quality of business environment, while the labour cost is significantly lower than sub-Saharan African countries. Although results should be considered tentative, high labour cost beyond endowment and conservative investment behavior emerge as important factors for the weak competitiveness in sub-Saharan Africa when controlling income level.

Analysis on International Trade of CLM Countries

Since their accession to AFTA, trade volumes of CLM countries have being grown rapidly while their trade patterns and directions have significantly changed. Recognizing the importance of international trade in CLM economies, this study attempts to analyze the trade patterns of CLM countries based the gravity model. The empirical analysis is conducted to identify the determining factors of each country’s bilateral trade flows and policy implications for promoting their trade.

Measuring smile curves in global value chains

The concept and logic of the "smile curve" in the context of global value chains has been widely used and discussed at the individual firm level, but rarely identified and investigated at the country and industry levels by using real data. This paper proposes an idea, based on an inter-country input-output model, to consistently measure both the strength and length of linkages between producers and consumers along global value chains. This idea allows for better identification and mapping of smile curves for countries and industries according to their positions and degrees of participation in a given conceptual value chain. Using the 1995-2011 World Input-Output Tables, several conceptual value chains are investigated, including exports of electrical and optical equipment from China and Mexico and exports of automobiles from Japan and Germany. The identified smile curves provide a very intuitive and visual image, which can significantly improve our understanding of the roles played by different countries and industries in global value chains. Further, the smile curves help identify the benefits gained by these countries and industries through their participation in global trade.

Heckscher-Ohlin : evidence from virtual trade in value added

The fragmentation of production chains across borders is one of the most distinctive feature of the last 30 years of globalization. Nonetheless, our understanding of its implications for trade theory and policy is only in its infancy. We suggest that trade in value added should follow theories of comparative advantage more closely than gross trade, as value-added flows capture where factors of production, e.g. skilled and unskilled labor, are used along the global value chain. We find empirical evidence that Heckscher-Ohlin theory does predict manufacturing trade in value-added, and it does so better than for gross shipment flows. While countries exports across a broad range of sectors, they contribute more value-added in techniques using their abundant factor intensively.