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International Production Sharing and Exchange Rates of Asian Countries

image of International Production Sharing and Exchange Rates of Asian Countries
Recent years has seen a sharp increase in the trade of intermediate goods between ASEAN countries and China, reflecting the emergence of China as a regional “assembly centre” and sourcing the bulk of parts and components from countries in South-East and North-East Asia in the production of final goods for export to the United States and the European Union. This expansion of trade in intermediates is closely linked to the spread of international production networks (IPNs) in Asia. The expansion raises important new analytical and policy challenges generating rapidly growing literature. This study focuses on how new patterns of production and trade influence the effects of exchange rates on international trade flows of manufactured goods, and draws attention to several ways in which IPNs have altered the nature of international production and trade.

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Preface and acknowledgments

The expansion of international production networks (IPNs), alternatively referred to as “global value chains”, raises important new analytical and policy challenges. This study demonstrates how the growing importance of international product fragmentation and intermediate goods in international trade has altered the links between exchange rates and international trade flows.

English

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