The Development of Interconnectedness within East Asian Regional Production Chains

Abstract

This study utilizes the Asian Development Bank's multiregional input-output tables to assess the evolution of production interconnectedness among China, Japan, Korea, Taiwan, Vietnam, and the US. Decomposition analysis reveals that foreign final demand increasingly drives domestic output, with China, Japan, and the US capturing more export-generated value-added than Korea, Taiwan, or Vietnam. Japan, Korea, and Taiwan exhibit higher domestic value-added from foreign exports, while industry-level analysis shows Vietnam's exports primarily benefit foreign partners. Panel regressions indicate a positive correlation between forward participation and value-added in China, but negative or mixed effects in Korea, Vietnam, and Taiwan.