The Role of Production Networks in the Development of China and Other Developing East Asian Countries

Abstract

Production networks have played important role in East Asian countries being the world’s factory and entering the process of convergence with the developed countries. Though there has been a rapid spread of production networks in all regions of the world, the East Asian model has its distinctive characteristics in terms of significance in the regional economy, geographic extensiveness involving a large number of countries in the region and degree of sophistication in both intra firm and arm’s length relationships across different firm nationalities. This does not, however, mean that the process has contributed to a decrease in the region’s dependence on the global economy. This work analyzes the strategies that have contributed to development of the developing East Asian countries and importance of the regional production networks. It is also revealed in this article that the dependence on EU and the US increase, despite the convergence between East Asian and developed countries, as clearly observed during 2008 global crisis. In this study, FDI inflows statistics of the UNCTAD, competitive industrial performance index of the UNIDO and GDP per capita and growth rate statistics of the World Bank and the statistics of other international institutions have been used.