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Regional Integration and Vertical specialization - a study of the telecommunications equipment industry in Southeast Asia

Dixon, Amelia LU (2011) NEKM01 20102
Department of Economics
Abstract
This paper examines the trade and specialization effects of China’s regional integration with
South East Asia. Production fragmentation enables a firm or country to specialize in upstream,
midstream or downstream activities rather than the whole production chain. A decrease in tariffs
and other service link costs justify outsourcing or re-locating production to the country with best
location advantages. Therefore a free trade area, such as the ASEAN-China Free Trade
Agreement should result in increased fragmented trade among the partner countries, and favor
vertical specialization.

The focus of the study is the telecommunications industry in ASEAN-5 and China. Calculations
of revealed comparative advantage show that... (More)
This paper examines the trade and specialization effects of China’s regional integration with
South East Asia. Production fragmentation enables a firm or country to specialize in upstream,
midstream or downstream activities rather than the whole production chain. A decrease in tariffs
and other service link costs justify outsourcing or re-locating production to the country with best
location advantages. Therefore a free trade area, such as the ASEAN-China Free Trade
Agreement should result in increased fragmented trade among the partner countries, and favor
vertical specialization.

The focus of the study is the telecommunications industry in ASEAN-5 and China. Calculations
of revealed comparative advantage show that China has the strongest comparative advantages in
both the production of components and in assembly operations. This illustrates the increased
importance of vertical linkages between upstream, midstream and downstream firms.
Agglomeration complicates the analysis of how investment flows and component trade is
affected by the creation of ACFTA. Combined with a substantial decrease of trade barriers in the
industry before integration this suggests that the effects of ACFTA on vertical specialization will
be limited. (Less)
Please use this url to cite or link to this publication:
author
Dixon, Amelia LU
supervisor
organization
course
NEKM01 20102
year
type
H1 - Master's Degree (One Year)
subject
keywords
production fragmentation, vertical specialization, telecommunications industry, regional integration, ACFTA.
language
English
id
1785440
date added to LUP
2011-02-10 15:18:27
date last changed
2011-02-10 15:18:27
@misc{1785440,
  abstract     = {This paper examines the trade and specialization effects of China’s regional integration with 
South East Asia.  Production fragmentation enables a firm or country to specialize in upstream, 
midstream or downstream activities rather than the whole production chain. A decrease in tariffs 
and other service link costs justify outsourcing or re-locating production to the country with best 
location advantages. Therefore a free trade area, such as the ASEAN-China Free Trade 
Agreement should result in increased fragmented trade among the partner countries, and favor 
vertical specialization.  
 
The focus of the study is the telecommunications industry in ASEAN-5 and China. Calculations 
of revealed comparative advantage show that China has the strongest comparative advantages in 
both the production of components and in assembly operations. This illustrates the increased 
importance of vertical linkages between upstream, midstream and downstream firms. 
Agglomeration complicates the analysis of how investment flows and component trade is 
affected by the creation of ACFTA. Combined with a substantial decrease of trade barriers in the 
industry before integration this suggests that the effects of ACFTA on vertical specialization will 
be limited.},
  author       = {Dixon, Amelia},
  keyword      = {production fragmentation,vertical specialization,telecommunications industry,regional integration,ACFTA.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Regional Integration and Vertical specialization - a study of the telecommunications equipment industry in Southeast Asia},
  year         = {2011},
}