Changes in the international specialization of food manufacturing industry in East Asia

Abstract

There has been a tremendous advance in the negotiations of international trade and investments to promote the development of world economy since 2000. However, studies on the changes in the international specialization along with the rapid growth of new emerging economies are insufficient, especially for food manufacturing industry. Therefore, the objectives of our study are to understand the actual situation of the international specialization of food manufacturing in East Asia and to clarify the mechanism of its change in the structures of trade since the 21st century. The following results are obtained from our empirical analysis. First, the patterns of international specialization in East Asia’s food manufacturing industry have been changed in two broad ways since 2000, one is corresponded by China for intra-industry trade and the other is corresponded by Japan, South Korea, and Taiwan for the inter-industry trade. Second, FDI from Japanese food manufacturing industry has the characteristics of horizontal direct investment (in one-way trade), and its effect of promoting international division of labor through intra-industry trade in East Asia is expected to be insignificant. Third, against the backdrop of its domestic economic growth, China’s food manufacturing industry is growing and its intra-industry trade is advancing with countries both inside and outside of East Asia. Based on the above analytical results, a policy implication is drawn for Japanese food manufacturing sector to realize a sustainable development by building a food system which is mutually complementary in international specialization through two-way trade with the countries in East Asia, particularly with China.