The
economic crisis of 1997 called East Asia’s economic miracle into question and
generated widespread criticism of the region’s distinctive developmental models.
The startling rapidity with which problems in one Asian economy were transmitted
to others in part reflects similar weaknesses across countries: overvalued
exchange rates, a run-up of unheeded, short-term, foreign debt, underdeveloped
domestic financial intermediaries and weak regulatory oversight. In our view,
contagion also reflected a deeper underlying fact about the region’s economic development.
Over the last two decades, driven neither by high politics as in the European
Union (EU) nor by formal trade agreement as in North-American Free Trade
Agreement (NAFTA), the economies in East Asia have become closely integrated at
the level of production organization.
The
massive literature on Asia’s economic integration, most of it focusing on trade
patterns and the investment and trade behavior of multinational corporations,
has by and large missed this deeper level of industrial integration. Arm’s-length
trade, foreign direct investment, and even intrafirm trade do not fully capture
the organizational structure of the region’s major growth industries and
markets. In electronics, textiles and apparel, autos, and other sectors, firms
in the region are increasingly linked across borders in complex and ongoing relationships
that extend beyond the boundary of the firm and span the entire value-chain in
the given activity. The architecture of these “cross-border production
networks,” the way that technology, know-how, resources and control flow across
them, and their implications for competition and cooperation in the region.
By a lead
firm’s “cross-border production network” (CPN) we mean the inter and intra-firm
relationships through which the firm organizes the entire range of its business
activities: from research and development (R&D), product definition and
design, to supply of inputs, manufacturing (or production of a service), distribution,
and support services. We thus include the entire network of cross border relationships
between a lead firm and its own affiliates and subsidiaries, but also its
subcontractors, suppliers, service providers, or other firms participating in cooperative
arrangements, such as standards-setting or R&D consortia. Choosing the CPN
as the unit of analysis captures the cross-border operations of the lead firm
itself, but also the proliferation of non-equity, non-arm’s-length, inter-firm relationships
in which significant value is added outside the lead-firm.
The value
of studying CPNs is that they closely mirror the rapidly changing division of
labor in the Asia-Pacific. In the electronics sector, CPNs are not simply
constructed to access cheap factor inputs (resources or labor) or to gain
access to expanding markets, two of the principle explanations for foreign
direct investment. Although those factors may have motivated initial
investment, CPNs are increasingly designed to both foster and exploit the
region’s highly heterogeneous technological capabilities. Indeed, a central theme
of our work is that CPNs are assembled to access locational advantages at each network
node associated with the increasingly specialized technology, skills and
know-how that are resident there.
The
origins of those specialized capabilities are multiple, and include both technology
transfers from multinationals and increasing investment in process and product
development on the part of firms in the region. However, the development of
local technological capabilities has also been a primary objective of
government industrial policies. The study of CPNs thus inevitably raises the question
of the role of the state in fostering the region’s rapid industrial transformation
and its particular pattern of economic integration.
0 comments:
Post a Comment