| Since the 1990s, the ever prevailed "flying geese" model in East Asia (EA) began to lose its advantage, and a new regional production networks began to take its place. Quick development of Vertical Specialization (VS) plays a key role in constructing the new production networks. Vertical Specialization also brings profound implications to EA in aspects such as welfare allocation, technology diffusion, regional trade patterns and the risk of macroeconomic volatilities. This dissertation aims to study the above issues in turn. The contents consist of five chapters, main points for each chapter are briefly introduced as follows:Chapterâ… is the introduction, in which the background and significance of our topic are firstly discussed, then a survey to the existed researches in related fields is followed. Based a comment on the existed papers, we put forward the scheme of the research proposal for this dissertation and major methodologies it will adopt. Finally, we conclude the major innovation of this dissertation and point out some directions for further research.In Chapterâ…¡, the evolution from the "flying geese" model to the current regional production networks in EA is surveyed, where we find that the rise of Vertical Specialization is the key factor shaping the new regional production networks. We employed the method presented by Hummels etal (2001) to study the development of VS in EA since the last two decades. GTAP (Global Trade Analysis Project) database provides data source called by Hummels etal (2001) ' s methodology, by which we calculated the VS content in nine major East Asian economies' gross export in 1995 and 2001. We also decomposed the VS content in East Asian gross export into industry level, and analyzed the VS content from perspective of industries for each economy. We then cast an econometric analysis to the factors affecting VS in EA, using the industrial level VS index obtained by our own calculation. Before the end of this chapter, we further decomposed the bilateral gross export ' s VS content among the major economies, according to direction of imports and exports respectively, and analyzed the characteristics of production networks embodied in the process of Vertical Specialization in EA.Chapterâ…¢is focused on discussion to the nature of stability of regional production networks and trade patterns under such production networks in EA. We found that, in a vertical specialized production networks, the mechanism for technology diffusion has changed. Division of labor within one product polarizes the activities of different countries in the production process, in which the developing countries are fixed on the stage of pure assembling, while the developed economies are focused in R&D, marketing and other stages with higher returns. Thus, what are learned from division of labor differs sharply between countries of different levels: the developing countries accumulate experience in assembling, while the developed economies get the opportunity to fortify their advantages in R&D. In such a pattern, the gap in relative gains between two types of countries trends to expand, developing countries' position in the end of global value chain therefore trends to be fixed. In this part, we explore the changed nature of technology diffusion in the new production networks, and its impact on the evolvement of East Asian production networks.In the second section of Chapter III, trade development in East Asia in the past three decades is investigated, following which an econometric test on Vertical Specialization' s contribution to trade growth in East Asia is cast. We also make a survey on the evolvement of "trade triangle" among Japan, other East Asian economies and US & Europe since the "flying geese" era, which finds that, within the present new "trade triangle", the developing economies in East Asia are exposed to a position of "double reliance" on external markets, i.e., they rely heavily on external markets both on parts& components imports and manufactured goods exports. In such a pattern, these economies are particularly vulnerable against external shocks.To explore the concrete mechanism of East Asian economies' response against external shocks under such a "double reliance" position, we construct a three-country, two-stage production/trade dynamic general equilibrium model in the framework of New Open Macro-economics (NOEM) in Chapter IV. In this model, volatilities of output in intermediate and final goods, consumption as well as trade balances in the two countries within one region triggered by various external shocks are analyzed. During the process of simulation, external shocks are assumed to arise from demand side (money supply or government expenditure) or supply side (production efficiency in final stage or labor supply). Meanwhile, various types of market integrations between intermediate goods markets, final goods markets and financial markets within the region are taken into account in simulating the effects of external shocks. After finishing the theoretical analysis, we cast an empirical test on East Asian economies, where the major propositions from the theoretical model are supported. Then in the last part of this chapter, we present policy suggestions to East Asia on pushing forward regional market integration under the background of vertical production and trade.In Chapterâ…¤, we first analyze China' role in constructing new production networks in East Asia, then we use data from China to test the major propositions about technology diffusion in regional production networks dominated by Vertical Specialization, which are presented in Chapterâ…¢. Results of the test turn to be positive to the above propositions. We then put forward suggestions to China on how to win technology update in present regional production networks. Finally, we investigate the progress and challenges in institutional economic integration in EA since 1997 and bring forward suggestions on China' s participation to East Asian regional economic integration. |
