Regime Shifts in East Asian Production Networks: Common-Factor Robust Panel Evidence after 2018

초록

This study examines whether East Asia’s production networks recovered or, instead, underwent sustained reconfiguration following the 2018 escalation of the US–China trade conflict. Using panel time-series methods applied to multi-country, multi-industry multi-regional input–output (MRIO) indicators for 2007–2023, the analysis links production-network propagation depth (average propagation length; APL) to domestic value-added export performance (VAX). To account for cross-sectional dependence and slope heterogeneity, the study reports common-factor robust long-run estimates using CCEMG and AMG. The results indicate that the negative long-run association between network depth and domestic value capture is concentrated in the forward-propagation channel (APL_F). FMOLS and DOLS benchmarks suggest a broader negative relationship but appear sensitive to unobserved common shocks. Error-correction estimates point to slow and weak adjustment towards the long-run equilibrium, consistent with diminished resilience in regional production systems. Panel structural-break tests identify regime shifts in 2011, 2015, and 2019, with the 2019 break coinciding with the trade-conflict escalation. Overall, the evidence suggests that the post-2019 configuration persists within the 2007–2023 sample, and should be interpreted as within-sample persistence through 2023, not as proof of permanence beyond the observation window.

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