The Changing Nature of the Production Network in East Asia

Abstract

Over the past two decades, East Asia has been the most successful region in the world in building up and joining regional or global supply chains and it has been described as Factory Asia (Baldwin, Singapore Economic Review 53(3): 449478, 2008). We argue that East Asia, apart from being the center of global manufacturing, is emerging as one of the world's leading final markets for consumption goods. This reorientation has nontrivial implications. First, the average lead time for the region's exporters will fall, translating into lower transportation and inventory costs. And second, East Asia will host more high value-added downstream value chain activities.