This paper examines the implications of global production sharing for economic integration in East Asia with emphasis on the behavior of trade flows in the wake of the 2008 global financial crisis. Although trade in parts and components and final assembly within production networks (“network trade”) has generally grown faster than total world trade in manufacturing, the degree of dependence of East Asia on this new form of international specialization is proportionately larger than elsewhere in the world. Network trade has certainly strengthened economic interdependence among countries in the region with the People's Republic of China playing a pivotal role as the premier center of final assembly. However, contrary to popular belief, this has not lessened the dependence of the export dynamism of these countries on the global economy. This inference is basically consistent with the behavior of trade flows following the onset of the global financial crisis.


The author is grateful to Waltraut Urban (Vienna Institute for International Economic Studies), Myunghun Lee (Inha University), Shigeyuki Abe (Doshisha University), and other participants of the Asian Economic Panel meeting, Seoul, 22-23 March 2010, for helpful comments on the first draft of the paper.

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