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Production fragmentation, Upstreamness, and Value-added: Evidence from Factory Asia 1990-2005

Discussion Papers

No.535

by Tadashi ITO and Pierre-Louis VEZINA
August 2015

ABSTRACT

We exploit the recent release of the 2005 Asian Input-Output Matrix to dress a picture of the geographic fragmentation of value added in Factory Asia from 1990 to 2005. We document 3 stylized facts. The first is that the average share of foreign value added embedded in production rose by about 7 percentage points between 1990 and 2005, from 9% to 16%. The second is that, contrary to popular belief, China’s production embeds a smaller share of foreign value added than other Factory Asia countries’. Between 1990 and 2005 among Factory Asia countries China grew most after Japan as a source of value added to other countries’ production. Third, country-industries at the upstream and downstream extremities of the supply chain embed a smaller share of foreign value added than those with intermediate levels of upstreamness.

Keywords: Factory Asia, supply chains, upstreamness
JEL classification: F13, F15

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