Resiliency of production networks in Asia: Evidence from the Asian crisis

Despite the financial origins of the recent economic downturn in the United States and Europe, the impact on Asian countries has been felt primarily through trade channels. The export-oriented manufacturing industries and countries dependent on them have been hit the hardest in Asia (Asian Development Bank, 2009a and 2009b). Due to a drastic drop in external final demand for manufactured goods produced in Asian countries, concern is greatest regarding the adverse effects of the global financial crisis and economic downturn on the real economies of the region. According to the latest Asian Development Bank (2009b) data in the second quarter of 2009 industrial production and exports in newly-industrialized economies (i.e., the Republic of Korea, Singapore, Taiwan Province of China and Hong Kong, China) were already showing the beginning of what might be a V-shaped recovery Nevertheless, there is concern about the overdependence on external final demand and that, through international production networks stretched across the region, Asian countries will continue to suffer from the deteriorating economic conditions outside the region that are centred on the United States.

Related Subject(s): Economic and Social Development