Transcript Slides Meng & Yamano

Regional integration
or disintegration in
the world production
network?
Norihiko Yamano (OECD)
and
Bo Meng (IDE-JETRO/OECD)
May 2010
Outline
• How to measure Economic Integration ?
• Measurement results of integration indicators
▫
▫
▫
▫
International specialisation?
Trade partnership
Production network
<integration index by gravity model>
Data sources
• Bilateral trade in goods and services
• Input-output database (OECD & IDE)
Economic integrations?
• Significant transformation of trade network
particularly in Asia-Pacific region in 1995-2005
▫ Less trade friction (transport cost, custom union,
ICT difusion)
▫ Substitution  Complementary
▫ International specialisation
• Geographically integrated?
Industry composition of traded goods
• The world composition of traded goods remained
stable in mid 1990s to mid 2000s, e.g. Chemicals
(10%11%), Transport eq. (12%11%), Comm equip
(8%10%), Machinery (9%8%), Textile (8%6%),
food (6%5%),
• On the other hands, leading export compositions have
changed in many countries. The differentiation and
specialisation in the manufacturing sectors are
apparent in recent trade statistics
International specialisation
(increased shares 1995-2006, more than 10% share of total exports)
▫
▫
▫
▫
▫
▫
▫
Mining (ISIC 10-14) in CA, MX, BR, CL / RU /
Textile (ISIC17-19) in IT
Chemicals (ISIC24) in US / BE,DE,ES,FR, GB / IN, KR, SG, TW
Machinery (ISIC29) in CZ, FI, JP
Comm equip. (ISIC30) in MX / FI,HU / CN, MY, PH
Computing machinery (ISIC32) in CN, TW, KR, PH, SG,TH
Motor vehicles (ISIC34) in US, BR / DE, FR, PL,HU,CZ / JP, KR
• Emerging Asian: labor intensive -> assembly
machinery
Inter and intra-regional trade
• High intra regional trade in Europe (major 22
EU members, 30% in 1995, 28% in 2005)
• While share of intra Asian trade flows
(ASEAN+E.Asia+India+Oceania) increase (12%
in 1995  15.1% in 2005), intra-NAFTA
and
Europe has decreased.
Counting the dominant partner links to
identify the demand and supply hubs
• Demand hub (l)
▫ Count the partners’ export link that depends on
country l’s economy at given threshold t
export (k,l) / Σl export (k,l) > t %
• Supply hub(k)
▫ Count the partners’ import link that depends on
country l’s economy at given threshold t
import (k,l) / Σl import (k,l) > t %
Structural changes in demand hubs in
Asia/Pacific (intermediate goods)
Single country based production
fragmentation indicators
• Import contents of exports also well-known as
vertical specialization (e.g. Hummels et al. 2001)
vs = Am(I-Ad)-1 Export
Am=import coefficient, Ad=domestic coefficient
Sliced by bilateral trade
vsik = u Amk (I-Adk)-1 EXik
Intermediate
Import
Production at j
Export of j
VS related indicators (equations)
• Import contents share of k’s exports (ICE)
= (vs1k+vs2k+…+vsnk) / exk
<demand-side perspective, affected by country
economic size>
• Induced exports by partner’s exports (EPE)
=(vsk1+vsk2+…+vskn)/ (ex1+ ex2+…+ exn)
<supplier’s perspective>
• Re-exported K’s intermediate exports (REI)
=(vsk1+vsk2+…+vskn)/
(imd.exk1+imd.exk2+…+imd.exkn)
<supplier’s perspective>
VS related indicators (conceptual fig.)
ICE
P1
vs 1k
EPE
…
P2
Pn
vs 2k
vs nk
K
ex k
Exports
vs f1
S
vs s1
REI
Vs sn
P1’s ICE
Pn
F’s intermediate
exports that are
consumed in P 1
vs k2
P1
P2
…
F
ex 1
…
vs fn
ex 2
Pn’s ICE
ex n
Exports
F’s intermediate
exports that are
consumed in P n
imd.ex fn =intermediate
exports from f to n
Import contents of exports (ICE)
by industry group
Total
Manufacturing
Higher technology manuf.
1995
2005
1995
2005
Services
Lower technology manuf.
1995
2005
1995
2005
Australia
14%
14%
28%
25%
16%
20%
10%
11%
China
16%
25%
22%
34%
15%
20%
10%
14%
Chinese Taipei
35%
48%
45%
55%
34%
53%
14%
19%
India
10%
13%
16%
21%
12%
18%
8%
6%
Indonesia
15%
18%
40%
36%
20%
21%
9%
13%
Japan
8%
15%
9%
16%
12%
22%
4%
7%
Korea
30%
39%
32%
41%
34%
42%
19%
23%
Malaysia
39%
52%
49%
65%
40%
45%
13%
31%
New Zealand
18%
18%
27%
26%
20%
19%
15%
14%
Philippines
32%
42%
56%
60%
45%
35%
17%
16%
Singapore
56%
59%
69%
71%
68%
78%
24%
30%
Thailand
33%
50%
57%
67%
29%
47%
13%
22%
Notes: Higher technology-intensive manufacturing group is defined as ISIC Rev.3 24, 29-35; lower technology-intensive manufacturing group is defined as
ISIC Rev.3 15-23, 25-28, 36-37; services sector is ISIC Rev.3 50-95.
Sources: OECD Input-Output Database, March 2010; IDE-JETRO Asian International Input-Output Database, 2005; OECD Bilateral Trade Database, March 2010;
OECD Trade in Services, January 2010.
Induced Intermediate Exports by Partner’s
Exports (EPE) (Percentage of World Exports
in Goods and Services)
CHN / JPN has high export
elasticities to world trade
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1995
2000
2005
Re-exported Intermediate Exports (REI)
(Percentage of a Country’s Total Intermediate Exports
Country size is irrelevant. High
in Goods and Services)
values for earlier stage of
production network
60%
50%
40%
30%
20%
10%
0%
1995
2000
2005
MRIO-based indicator
• Domestic effects and intercountry spillover
effects (unit increase in final demand)
A B
of MRIO Leontief inverse are
A
-1
B
D ¤ (I-R) ,
C
and
D
(I-R)-1 - D ¤ (I-R)-1 ,
respectively where R=intercountry input
coefficient matrix , D is diagonal block,
¤represents cell-by-cell product operation.
C D
OECD I-O and BTD based Inter-country
I-O table
• 48 countries (30 OECD countries), 37 sectors
• 1995-2000-2005
• The missing year data is interpolated using the
available tables
• Trade coefficients are based on bilateral trade in
goods and services
• The missing services trade (of early years) is
filled by trade model estimates
Inter-country spillover effects(1995-2005)
Asia/Oceania
americas
Europe
row
Asia/Oceania
americas
Europe
row
Austria
1995
Asia/Oceania
americas
2005
Europe
row
Asia/Oceania
americas
Germany
1995
2005
Europe
row
Increased intercountry spillover
effects for
neighbor
European
countries and
Asian countries
Inter-country spillover effects(1995-2005)
United States
Asia/Oceania
americas
Japan
Asia/Oceania
americas
Europe
row
1995
China
Europe
row
Asia/Oceania
americas
1995
Asia/Oceania
americas
2005
Europe
row
Europe
row
1995
Asia/Oceania
americas
2005
Europe
row
Asia/Oceania
americas
2005
Increased inter-country spillover effects particularly in Asia
Europe
row
Summary for findings
• Benefitted by WIOD data products
• European structure is stable, Asia-pacific
experienced great changes
• Observed increase in intra-regional trade and
export product specialisation
• The position of a country in the global production
supply chain is explained by the combinations of
indicators of ICE, EPE, and REI.
• Inter-country spillover effects increased
particularly for neighbor countries
 “regional” economic integration
Measurement of international
interdependence
based on gravity
Traditional gravity model:
model and𝑻trade
data
= 𝑨 ∙ (𝑮𝑫𝑷 ) ∙ (𝑮𝑫𝑷 ) ∙ (𝒅 )
𝒓𝒔
𝒓 𝜶
𝒔 𝜷
𝒓𝒔 𝜸
𝑻𝒓𝒔 : country r’s import from counry s
𝒅𝒓𝒔 : physical distance (time distance) between r and s
𝐥𝐧 𝑻𝒓𝒔 = 𝐥𝐧 𝑨 + 𝛂𝐥𝐧 𝑮𝑫𝑷𝒓 + 𝛃𝐥𝐧 𝑮𝑫𝑷𝒓 + 𝜸 𝐥𝐧 𝒅𝒓𝒔 + 𝝁𝒓𝒔
𝑻
𝒓𝒔
𝒓 𝜶
𝒔 𝜷
= 𝑨 ∙ (𝑮𝑫𝑷 ) ∙ (𝑮𝑫𝑷 ) ∙ (𝒅
Total Resistance (TR):
𝐓𝐑
𝐫𝐬
=𝒅
𝒓𝒔
𝟏
𝝁𝒓𝒔 𝜸
∙ 𝒆
Non Geographical Resistance (NGR):
𝑵𝑮𝑹 =
𝟏
𝒓𝒔
(𝒆𝝁 )𝜸
𝒓𝒔
∙
𝟏
𝒓𝒔
(𝒆𝝁 )𝜸 )𝜸
Regression
results
Year
(Intercept) log(GDPr[, year])
2000
2001
2002
2003
2004
2005
2006
10.296
10.357
9.953
9.706
9.448
9.472
9.507
0.872
0.856
0.871
0.867
0.880
0.880
0.880
39.52
<2e-16
***
signf. Codes ***: 0.001
47.77
<2e-16
***
t value (2006)
Pr(>|t|) (2006)
log(GDPs[, year]) log(disance[, 1])
0.971
-0.896
0.953
-0.878
0.942
-0.838
0.947
-0.824
0.957
-0.819
0.964
-0.833
0.964
-0.842
52.33
<2e-16
***
-35.49
<2e-16
***