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Production Networks in the Asia-Pacific Region: Facts and Policy Implications

Discussion Papers


by HIRATSUKA Daisuke
November 2011


Production networks have been extensively developed in the Asia-Pacific region. This paper employs two micro-level approaches, case studies and econometric analysis, using JETRO’s firm surveys which investigate Japanese affiliates operating in Southeast Asia. These two approaches found that production networks have extended, involving suppliers, across various nations in the Asia-Pacific region, and that production bases in host and home countries have different roles. A home country serves as a headquarters with services such as R & D, international marketing, and financing. A high tariff policy in a host country may foster domestic industries through the expansion of procurement from domestic suppliers, either indigenous or foreign, but it may discourage a country from becoming an export platform.

Keywords: skilled differentiation, high tariff policy, export-platform FDI
JEL classification: F14, F15, F23

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