2. Should middle income countries
pursue the same development
strategies of Korea or Japan?
My answer is NO!
Why?
2
3. Because of 2nd unbundling due to ICT
revolution from the end of 1980s.
Up the 1970s, industrialization meant
building the whole supply chain at
home, but in the 21st century
globalization, nations could
industrialize by joining a supply chain.
(Richard E. Baldwin (2010))
3
4. Intra-industry trade (IIT) index
Factory Asia and Factory Europe increased IIT.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1 1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Argentina
Chile
China
Czech Republic
Hungary
Indonesia
Korea
Mexico
Malaysia
Philippines
Poland
Thailand
Vietnam
4
5. But is it enough?
My answer is no.
Evidence of product quality upgrading in the
Eastern European countries, while no such
evidence in Asia.
5
6. Evolution of GDP per capita
0
5000
10000
15000
20000
25000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
China
Malaysia
Thailand
Czech Republic
Hungary
Poland
6
8. Unit value difference in IIT (Data of Japan)
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
China
Germany
France
Indonesia
Korea
Malaysia
Philippines
Thailand
USA
8
9. So, better to go to higher technology stages.
(as Porametee from Thailand has argued)
But is it always better to go to more “high-tech”
stages?
My guess is “probably no”.
Need some concentration to some stages in
order to benefit from agglomeration effect
and also to have market power.
9
10. No need to be Apple computer, but be
GIANT of bicycles or Chimei of ABS
resins in Taiwan.
So, the government needs to provide a
business friendly environment. (as
Allauddin from Malaysia have argued)
10
11. Up to here, the global supply chain.
Another thing which I think is important is
service trade liberalization.
Evidence from Czech Republic: Service sector
trade is associated with productivity increase
of related manufacturing sector. (Arnold,
Javorcik and Matto (2011))
Service trade is very small in Asia (Baldwin and
Lopez-Gonzales (2012))
11