The Spatial Structure of Production/Distribution Networks and Its Implication for Technology Transfers and Spillovers

This paper argues that a variety of firm specificity supported by sophisticated inter-firm relationships is essential for understanding the mechanics and spatial structure of international production/distribution networks in East Asia. By mapping the two-dimensional fragmentation framework (Kimura and Ando (2005)) into geographical space, the paper proposes the concept of four layers of transactions in production/distribution networks: (i) local, (ii) sub-regional, (iii) regional, and (iv) the world. The concept effectively bridges geographical extensions of production/ distribution networks and the nature of transactions in terms of intra-firm vs. arm's-length as well as technological/managerial conditions. In addition, the paper discusses the implications of such geographical structure of production/distribution networks for technology transfers/spillovers from multinationals to local firms and claims its importance in new development strategies.Fragmentation, new economic geography, firm heterogeneity, multinational enterprises, and technology spillovers.

The Nature and Characteristics of Production Networks in East Asia: Evidences from Micro/Panel Data Analyses

Production networks in East Asia, particularly being extended by machinery industries, have presented unprecedented development with their significance in economies in the region, their geographical extension, and their sophistication in combining intra-firm and arm's length transactions. In particular, the fragmentation of production activities together with the formation of industrial agglomerations in developing countries is a novel phenomenon that would lead to an East Asian model of economic development. Starting from a brief review of our conceptual framework based on the fragmentation theory as well as an empirical overview with international trade statistics and others, the paper presents a survey on empirical evidences that have been established by previous micro-data analyses in East Asia and discusses a list of empirical issues that future studies should explore. Topics include (i) the selection of exporters and investors, (ii) organizational structure and spatial design of production networks, (iii) location choice, (iv) impacts of outward FDI on developed countries, and (v) learning and impacts of inward FDI on LDCs.

Japan's Model of Economic Development: Relevant and nonrelevant Elements for Developing Economies

Japan was the first non-western country to accomplish successful industrialization, and the dominant perception of its .industrial policy. had over-emphasized specific characteristics of Japan. However, from the perspective of today.s development thinking, Japan.s economic history shared a wide range of common factors in usual economic development: macroeconomic stability, human resource development, and economic infrastructure. Industrial policy in Japan sometimes worked well and sometimes did not, depending on how effectively it counteracted market failure and took advantage of market dynamism. We must note, however, that the external conditions faced by Japan were widely different from what today.sindustrial policy, industrialization, trade liberalization, macroeconomic stability, economic infrastructure

The Internationalization of Small and Medium Enterprises in Regional and Global Value Chains

Production networks and the regional division of labor have been established in East Asia resulting in massive vertical intra-industry trade in parts and components within the region. This phenomenon is known as cross-border production sharing or the fragmentation of production processes into many stages across different countries. New development strategies claim that participation in international production and distribution networks is the key to accelerating economic development in the era of globalization. This process suggests that vertical input-output linkages between local firms and multinational corporations are the most powerful channels to accelerate technology transfers and spillovers. Given the trends of globalization and economic integration in East Asia, there is significant potential for the small and medium enterprise (SME) sector to increase its contribution to the region's development through greater participation in global value chains. However, multiple market failures exist with regard to the development of SMEs and local entrepreneurship. These risks can be mitigated by proper policy measures such as strengthening technological and human resource capabilities through better networking and facilitating access to financing for SMEs. Despite many distortions and inefficiencies in implementing regional economic integration schemes in East Asia, there are many cumulative positive effects contributing to the emerging trend internationalization of SMEs in the region. This process can be significantly strengthened by creating a positive business environment through the standardization of products and services, rules and regulations, and a seamless market infrastructure in the region.internationalization SMEs; regional development policies; regional market failure

Enhancing the Benefits for India and Other Developing Countries in the Doha Development Agenda Negotiations

This paper utilizes micro-panel data for firms located in Japan and examines differences in static and dynamic corporate performance between foreign-owned and domestically-owned firms in the 1990s. We find that foreign-owned firms not only reflect superior static characteristics but also achieve faster growth. In addition, foreign investors appear to invest in firms that may not be immediately profitable now but those that are potentially the most profitable in the future. The results imply that foreign investors bring useful firm-specific assets into the Japanese market, which may work as an effective catalyst for necessary structural reform.

A Lot of Reason Why We Should Invest More in East Asia

Although the impact of financial crisis originated from North America and Europe has come to East Asia through both the financial link and the real economy link, the East Asian countries have so far largely responded to it calmly and cautiously. There are now a lot of reasons wy we should invets more in East Asia not only for providing short-run stimulus but also for strengthening long-run growth basis. The introduction of market forces in infrastructure development in the form of public-private partnership (PPP) is delayed in East Asia and is thus to be promoted. However, the importance of public initiative including official development assistance (ODA) and other official flows (OOF) must be emphasized in recession.East Asia, financial crisis, investment, PPP, ODA, OOF

Globalizing Activities and the Rate of Survival: Panel Data Analysis on Japanese Firms

This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies.

Why Is the East Asia Industrial Corridor Needed?

The East Asia Industrial Corridor Project, in particular the Southern Corridor and its extension, can be a path-breaking effort for attaining both deepening economic integration and narrowing development gaps. New economic thoughts claim the necessity of comprehensive approach in which various policy modes and a number of stakeholders are effectively coordinated.East Asia; Industrial Corridor