Measuring global value chains and regional economic integration : an international input-output approach

Firms that are expanding their cross-border activities, such as vertical specialization trade, outsourcing, and fragmentation productions, have brought dramatic changes to the global economy during the last two decades. In an attempt to understand the evolution of the interaction among countries or country groups, many trade-statistics-based indicators have been developed. However, most of these statistics focus on showing the direct trade-specific-relationship among countries, rather than considering the roles that intercountry and interindustrial production networks play in a global economy. This paper uses the concepts of trade in value added as measured by the input–output tables of OECD and IDE-JETRO to provide alternative indicators that show the evolution of regional economic integration and global value chains for more than 50 economies. In addition, this paper provides thoughts on how to evaluate comparative advantages on the basis of value added using an international input–output model.

Chapter 1 Economic Integration and Industry Location: Theories, Empirical Results, and Implications for CLMV

Trade affects the internal location of industry in two ways: it induces firms to specialize and it expands the set of markets that firms serve. If there are industry-specific external economies, firms in related industries will spatially agglomerate (Hanson 1996a). In the context of economic integration, diminished barriers to trade affect industry location particularly in less developed countries. As described below, regional agreements in North America and Europe have caused frontier regions to expand. These regions, which include border regions and port cities, have advantages over internal regions in terms of access to foreign markets. Since trade liberalization induces many firms in developing countries to participate in production networks and to specialize in labor-intensive activities such as assembling and processing of foreign-made components, their inputs as well as final products need to be carried across borders. Therefore, the best industry location, one that minimizes transport costs, is likely to shift to frontier regions. In East Asia, China has developed rapidly since it opened up to international trade. Simultaneously, a large amount of foreign direct investment (FDI) has been attracted and industry agglomerations have been formed in coastal regions, that is, frontier regions linked to the global market by sea, leaving many internal regions behind. Similarly, Cambodia, Laos, Myanmar, and Vietnam (CLMV) have joined AFTA and/or the WTO and liberalized international trade since the 1990s. Moreover, transport infrastructures such as the East-West Economic Corridor, the Southern Economic Corridor, and the North-South Economic Corridor have been built and narrowed economic distances in the Greater Mekong Subregion (GMS). As a result, frontier regions are likely to increase their location advantages and lure labor-intensive operations from neighboring countries. It is expected that, as has happened in North America and Europe, economic integration in East Asia will significantly affect internal geography in CLMV. In this study, I first review theories relevant to economic integration and industry location within a country. In particular, emphasis is placed on the new economic geography (NEG). Secondly, empirical results for North America and Europe are surveyed since they have preceded East Asia in regional integration and a substantial number of studies have been conducted on these regions. The final section summarizes and discusses implications for internal geography in CLMV.

Economic integration, location of industries, and frontier regions : evidence from Cambodia

We examine changes in the location of economic activity in Cambodia between 1998 and 2008 in terms of employment growth. During this period, Cambodia joined ASEAN and increased trade with neighboring countries. Drawing on the predictions of the new economic geography, we focus on frontier regions such as border regions and international port cities. We examine the changing state of manufacturing in Cambodia from its initial concentration in Greater Phnom Penh to its growth in the frontier regions. The results suggest that economic integration and concomitant trade linkages may lead to the industrial development of frontier regions as well as the metropolitan areas in Cambodia.

Economic integration in North America: Formal, Informal and Spatial Aspects.

An exemination of a series of indicators of economic integration in the western hemisphere (Canada-USA-Latin America) indicates that it is proceeding under the influence of formal trade agreements and informal forces including technological change, multinational firm rationalization and location strategies, etc.

On the Individual Optimality of Economic Integration

Ce document est une version antérieure du document "On the Individual Optimality of Economic Integration", nov. 2015 : http://hdl.handle.net/1866/12794

On the individual optimality of economic integration

Which countries find it optimal to form an economic union? We emphasize the risk-sharing benefits of economic integration. Consider an endowment world economy model, where international financial markets are incomplete and contracts not enforceable. A union solves both frictions among member countries. We uncover conditions on initial incomes and net foreign assets of potential union members such that forming a union is welfare-improving over standing alone in the world economy. Consistently with evidence on economic integration, unions in our model occur (i) relatively infrequently, and (ii) emerge more likely among homogeneous countries, and (iii) rich countries.

On the individual optimality of economic integration

Ce document est une version mise-à-jour du document "On the individual optimality of economic integration", mars 2011 : http://hdl.handle.net/1866/4829

European economic integration

The purpose of this paper is to evaluate the recent trend in European economic affairs - the desire for integration. These plans and proposals were an expression of the need in the post war era for economic planning on a regional scale. It was in this respect that Europe experimented in a new approach to international economics.