Abstract:
This paper investigates the impact of Global Production Networks (GPNs) on the industrial development in 3 aspects; domestic value added, labor productivity, and export performance, employing Trade in Value Added database at the country-sector level from Organization for Economic Cooperation and Development (OECD). The estimation is based on pooled time series, cross section and period fixed effect covering Automotive industry in 4 selected ASEAN countries; Thailand, Indonesia, Malaysia, and Philippines from 1995 to 2016. The results suggest that Thailand can exploit the benefit from GPNs through task specialization and economies of scales, at the same time expanding the domestic capacity. All GPNs involvements make Thailand gain positive value added and productivity, especially through forward linkages. And downstream specialization significantly boosts Thailand’s export performance. Indonesia significantly gains positive value added and productivity through backward linkages in GPNs, while forward linkages boost its export performance. Malaysia significantly lowers value added and productivity from GPNs involvement, which implies the limited domestic capacity to increase the GPNs participation. And though downstream specialization significantly boosts Malaysia's export performance, backward linkages significantly decrease domestic content in gross exports. Lastly, Philippines’ GPNs involvement does not have a significant impact on value added and productivity, and the domestic chains would contribute more to the industrial development. Philippines can increase domestic content in gross exports by producing selected auto parts which they have comparative advantages. As a result, its forward linkages significantly boost gross exports. However, its backward linkages significantly lower its domestic content in gross exports.
