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22Nina Tsvetkova
Countries of Southeast Asia in Global Value Chains: computer and electronic equipment, 1995-2015
Abstract: The countries of Southeast Asia have occupied prominent positions in international division of labour as ICT goods exporters by 2000 and managed to maintain these positions by 2015 in the context of growing competition, with China, in the first place. The article is a continuation of the author's article1 published in Vostochnaya Analitika. The present article makes an attempt to "trace" the place of countries of South East Asia in global value chains in electronics by analyzing trade in electronic components and to consider the problem of creation of value added in computer, electronic, optical equipment manufacturing in these countries.
Keywords: countries of South East Asia, ICT goods, electronic components, exports, value added, global value chains.
The purpose of the article is to analyze the place that countries of South East Asia have taken in global value chains in manufacturing of computer, electronic and optical equipment (detailed data for these industries are given in TIVA (Trade In Value Added) Dataset, OECD). In the article, data from UNCTADStat database on ICT goods exports are also used2. As it is stated in UNCTAD Information Economy Report 2010, ICT goods include such categories as computer equipment, telecommunications equipment, consumer electronics (tele-, video-, audio-equipment), electronic components and miscellaneous goods3.
Countries of South East Asia: Singapore, Malaysia, Vietnam, Thailand, the Philippines have become leading world exporters of ICT goods. The share of countries of South East Asia in world ICT goods exports remained relatively stable in the course of 2000-2015; it decreased slightly from 17.0 to 14.9%, with world ICT goods exports growing in 2000-2015 from $1 trln to $2 trln. In 2015 the share of countries of South-East Asia amounted to 23% of world electronic components exports, 13% of computer equipment exports, 9% of telecommunications equipment and consumer electronics exports. Some of the countries of South East Asia (Singapore, Malaysia) have occupied important positions in international division of labor in electronics industry by the beginning of 1990-s and managed to maintain them by 2015. Other countries (such as Vietnam) practically "rushed" into the group of top ICT goods exporters in 2010-2015.
1 Tsvetkova N. South-East Asian Countries in International Division of Labour: ICT goods exports, 2000-2015 // Vostochnaya Analitika, 2018, No. 3.
2 It should be taken into consideration that the industries on which data are provided in TIVA Dataset, OECD, are not identical to the industries included in UNCTAD database.
3 Information Economy Report 2010. UNCTAD, N.Y.; Gen., 2010. P. 40.
While some Southeast Asian countries step up exports of electronics, ICT goods, other countries of the region reduce their ICT goods exports orienting their production to the internal market. It is the case of Indonesia, the exports of ICT goods from which in 2000-2015 shrank from $7.6 B (4.5% of ICT goods exports from South East Asia) to $5.3 B (1.8% of exports from South East Asia). But as a whole, Indonesia, one of the most populated countries in the world, is also one of leading economies by volume of value added created in manufacturing ($205.8 B in 2013)4.
In the UNIDO Industrial Development Report 2013 "Sustaining Employment Growth. The Role of Manufacturing", instead of standard divisions: developed and developing countries, the countries are divided into two other groups - industrialized and industrializing countries. China, Taiwan, South Korea and Singapore are included into the group of industrial countries, besides developed countries. The majority of developing countries are included into the group of industrializing countries. Separate data are given for these two groups of countries. In 2005 in value added created in radio-, television, telecommunications equipment manufacturing in industrializing countries the share of Thailand reached 33.4%; that of Indonesia, 14.6%; of the Philippines, 11.7%, that is more than the share of such large countries as Brazil (11.6%) and India (7.5%). The share of all industrializing countries in value added created in radio-, television, telecommunications equipment manufacturing in the world in 2005 amounted to 24%; consequently, the share of Thailand was equal to 8% of value added in the world; that of Indonesia, to 3.5%; the Philippines, to 2.8%. In 2011 in value added created in radio-, television, telecommunications equipment manufacturing in industrializing countries the share of Thailand shrank to 14.9%; that of the Philippines, to 7.5%; while the share of Indonesia increased to 26.4. In 2005 in value added created in computer and office equipment manufacturing the share of the Philippines was 19.5% (that exceeded the share of India - 13.5%), the share of Thailand - 8.7%. In 2011 r. the share of the Philippines decreased to 17.3%, and that of Thailand grew to 12.6%5.
According to OECD data, in 2011 Singapore was the first among Southeast Asian countries by gross output of production of computer, electronic and optical equipment ($91.3 B), Malaysia was second ($76.4 B), the Philippines, third ($43.7 B); Indonesia, fourth ($33.2 B) (graph. 1). According to TIVA data, in 2000 Malaysia, Singapore, the Philippines, Thailand (in that order) were leading exporters of computer, electronic and optical equipment; in 2011 the ranks were the same, only Thailand outpaced the Philippines. The data differ from the data of UNCTADStat as the latter include more categories (consumer electronics, telecommunications equipment), the categories also being not identical6. In 19952015 Singapore was an undisputable leader in exports of ICT goods from South
4 Sustaining Employment Growth. The Role of Manufacturing. Industrial Development Report 2013. UNIDO. P. 196.
5 Industrial Development Report 2013. Sustaining Employment Growth. The Role of Manufacturing UNIDO, 2013. P. 177.
6 See Note 2.
East Asia, Malaysia being always second; the Philippines and Thailand were also leading exporters7. Vietnam in 2011 had modest positions in ICT goods exports, but in 2015 it became 4-th world exporter of telecommunications equipment, and by its ICT goods exports it outpaced not only the Philippines, but also Thailand and became 3d ICT goods exporter in South-East Asia.
Graph 1
Production, Gross Output: Computer, Electronic and Optical Equipment in Southeast Asian Countries, 1995-2011 ($ B)
90
Indonesia Malaysia the Singapore Thailand Vietnam Philippines
Source: Trade in Value Added (TiVA) - October 2015. http://stats.oecd.org/index. aspx? DataSet-Code=TIVA2015_C1 (access date: 14.01.2018).
Table 1
Southeast Asian Countries: Computer, electronic and optical equipment, gross production and exports 1995-2011 ($ B,%)
Production Exports Share of exports in production Production Exports Share of exports in production
$ B % $ B %
2000 2011
Indonesia 7.4 5.8 78.3 33.2 7.9 23.8
Malaysia 61.9 49.0 79.2 76.4 65.0 85.1
the Philippines 17.9 14.1 78.8 43.7 15.2 34.8
Singapore 52.6 32.7 62.2 91.3 46.4 50.8
Thailand 13.1 10.7 81.7 32.6 26.4 81.0
Vietnam 1.5 0.8 68.1 10.9 8.5 78.0
Source: Trade in Value Added (TiVA) - October 2015. http://stats.oecd.org/index. aspx? DataSet-Code=TIVA2015_C1 (access date: 14.01.2018).
7 Tsvetkova N. South-East Asian Countries in International Division of Labour: ICT goods exports, 2000-2015 // Vostochnaya Analitika, 2018, No. 3
In several Southeast Asian countries an important share of production of computer, electronic and optical equipment is export-oriented. According to TIVA Database (OECD), in 2000 the share of exports in production in the industry reached 81.7% in Thailand, 79.2% - in Malaysia, 78.8% - in the Philippines, 62.2% - in Singapore. In Indonesia the share of exports in production of computer, electronic and optical equipment was 78.3%, by 2011 this share shrank to 23.8%. Exports of computer, electronic and optical equipment from Vietnam in 2000 were low, but in 2011 grew significantly and the share of exports in production reached 78.0% (and by 2015, according to UNCTAD data, the exports of ICT goods from Vietnam skyrocketed). By 2011 the share of exports in computer, electronic and optical equipment production increased to 85% in Malaysia, remained unchanged in Thailand (81.0%), decreased in Singapore to 50.8% and in Thailand to 34.8%.
Graph 2
Southeast Asian Countries: Computer, electronic and optical equipment: domestic value added, 1995-2011 ($ B,%)
Indonesia Malaysia the Singapore Thailand Vietnam Philippines
Sources to Graph. 1.
If we consider the indicator of domestic value added created in production of computer, electronic and optical equipment, which is taken into account in calculations of Gross domestic product, in 2011 Singapore was first: $18.8 B of value added, with the production of $91.3 B, the share of domestic value added in production was equal to 20.6%. Three Southeast Asian countries had almost the same level of domestic value added: the Philippines ($12.8 B in the production of $43.7 B), Malaysia ($12.6 B of $76.4 B) and Indonesia ($11.8 B of $33.2 B), but the share of domestic value added in gross production varied: 35.5% in Indonesia, 29.3% in the Philippines and 16.5% in Malaysia (calc. on data to graph 1, 2). While some countries are engaged mainly in assembly of manufactured products (Vietnam), other countries use foreign technologies and other inputs for manufacturing
electronic components (Singapore, the Philippines); third countries turn to import substitution and production oriented at internal market (Indonesia); and fourth countries have both assembly of manufactured products and manufacturing electronic components (Malaysia, Thailand).
Foreign value added created abroad constitutes an important share of computer, electronic and optical equipment production and exports in Southeast Asian Countries. These countries are greatly involved in global value chains.
Much attention has been focused on global value chains problem in Russian and foreign scientific publications8 since the beginning of 2000-s. V. Kondrat'ev (IMEMO, RAS) states: "The international economy at the present time is mostly constituted on the basis of global chains of value added, or simply global value chains (GVC). The term global value chain means a sequence of core business functions or production process stages - R&D, design, manufacturing, marketing, after-sale services for consumers ... The fact that at present more and more business functions are geographically distributed in different countries is a proof of globalization of such value chains"9.
Electronics, ICT goods production are an example of industries, in which international division of labour is deepened, with fragmentation of production processes into stages distributed in different countries and production processes coordinated from a unique center.
Southeast Asian countries (SEC) are actively involved in global value chains (GVCs)10. Participation in global value chains is characterized by two indicators: downward linkages - the share of foreign value added in exports, and upward linkages - the share of the country industry exports processed in GVCs in third countries. According to WTO database (2016), in 2011 the level of participation of Singapore in GVCs (all industries) reached 62.6%, in Malaysia - 60.4%, including the share of foreign value added in exports equal to 41.7% in Singapore and to 40,6% in Malaysia.
According to WTO data (2016), the share of foreign value added in exports of computer, electronic and optical equipment in 2011 reached 40.1% in Singapore, 42.2% in South Korea, 44.6% in Taiwan, 55% in China and 66.8% in Malaysia. The data could be interpreted in another way. A glass can be half-empty or half-full. The share of domestic value added in exports of computer, electronic and optical equipment in 2011 reached 33.2% in Malaysia (the country is often called an assembly of manufactured goods workshop for foreign transnationals), 45% in China, 55.4% in Taiwan, 57.8% in South Korea, 59.9% in Singapore. The
8 Global Value Chains in a Changing World. Ed. by D.K. Elms and P. Low. WTO, Fung Global Institute and the Temasek Foundation, 2013; Sokolov V. Mezhdunarodnye proizvodstvennye tsepochki v ATR //Mirovaia ekonomika i mezhdunarodnye otnosheniia. 2015, № 3. S. 48-55; Kondrat'ev V. Mirovaia ekonomika kak sistema global'nykh tsepochek stoimosti // Mirovaia ekonomika i mezhdunarodnye otnosheniia (ME i MO). 2015, № 3. S. 5-17.
9 Kondrat'ev V. Mirovaia ekonomika kak sistema global'nykh tsepochek stoimosti // Mirovaia ekonomika i mezhdunarodnye otnosheniia (ME i MO). 2015, № 3. S. 5.
10 Global Value Chains in a Changing World. Ed. by D.K. Elms and P. Low. WTO, Fung Global Institute and the Temasek Foundation, 2013; Sokolov V. Mezhdunarodnye proizvodstvennye tsepochki v ATR //Mirovaia ekonomika i mezhdunarodnye otnosheniia. 2015, № 3. S. 48-55.
second index of participation in global value chains are upward linkages, the share of exports processed in GVCs in third countries. This share was rather high in Taiwan (26%), the companies of which export electronic components and organize production in their affiliates in other countries with cheaper workforce (mainly in China). This share amounted to 16.7% in South Korea, 14% in Singapore; these countries are also exporting electronic components, their transnationals such as Samsung Electronics and Flextronics (Singapore) also have many foreign affiliates. In Malaysia, which is mainly engaged in assembly of manufactured electronic products, this share was 10.6% (table 2).
Table 2
Southeast Asian and East Asian Countries: Global value Chains in Computer, electronic and optical equipment production, 2011 (%)
Share of imported value added in exports Share of the industry in exports to global value chains in third countries
China 55 8.2
Republic of Korea 42.2 16.7
Taiwan (Province of China) 44.6 26
Singapore 40.1 14
Malaysia 66.8 10.6
Source: WTO. Trade in Value Added and Global Value Chains. https://www.wto.org/english/res_e/ statis_e/miwi (access date: 20.03.2016).
The graphs 3-6 show evolution of the share of foreign value added in exports of computer, electronic and optical equipment in 1995-2011 in Southeast Asian countries. The trajectories are quite different. In Vietnam that has recently become involved in assembly of electronic devices this share grew from 58% to 70.4% (graph 3).
Graph 3
Vietnam: Computer, electronic and optical equipment: foreign value added in
exports, 1995-2011 (%)
Vietnam
Source: Trade in Value Added (TiVA) - October 2015. http://stats.oecd.org/index. aspx? DataSet-Code=TIVA2015_C1 (access date: 14.01.2018).
A high share of foreign value added in exports that increased from 34.8% to 55.9% in 1995-2011 was observed in Cambodia that is only beginning to take part in international division of labour in electronics as an exporting country (its exports of all ICT goods in 2015 were $0.2 B). On the contrary, in Indonesia, one of the most populated countries in the world, in which electronics industry is oriented at the rapidly growing internal market, both the exports of computer, electronic and optical equipment electronics and the share of foreign value added in exports decreased (the latter, to 27.1 in 2011) (graph 4).
Graph 4
Indonesia and Cambodia: Computer, electronic and optical equipment: foreign value added in exports, 1995-2011 (%)
Source to Graph 3.
In Thailand where assembly of manufactured goods plays an important role, the share of foreign value added in exports of computer, electronic and optical equipment in 1995-2011 increased from 49% to 65.3%. In Singapore where development of labour-intensive assembly is a history of the past this indicator shrank from 52.7% to 40.1% (graph 5).
Graph 5
Singapore and Thailand: Computer, electronic and optical equipment, foreign value added in exports, 1995-2011 (%)
Source to Graph 3.
Malaysia has been stepping up exports of electronic components, but it still remains, to a great extent, an assembly workshop, the manifestation of that is a high share of foreign value added in exports of computer, electronic and optical equipment (66.8% in 2011). The Philippines are specializing on manufacturing of electronic components (HDD, for example), and not on assembly; therefore, the share of foreign value added in exports is low; it decreased from 58.6% in 2005 to 41.3% in 2010 and 28.5% in 2011 (graph 6). It should be emphasized that the source of imported value added in exports of computer, electronic and optical equipment for Southeast Asian countries is often their own region, more exactly the extended region of South East and East Asia, though partly this value added is absorbed by services (R & D, design, patents, cost of brands), the income on which is received by the countries of brands' owners - the USA and Japan, in the first place (the global value chain in electronics has a form of a "smile" icon, with the above-mentioned services in the upper right and left parts of it).
Graph 6
Malaysia and the Philippines: Computer, electronic and optical equipment, foreign value added in exports, 1995-2011 (%)
70,2 70,7
- Malaysia • The Philippines
1995 2000 2005 2010 2011
56.8
58,6
41.3
28.5
Source to Graph 3.
Authors from High School of Economics T. Meshkova and E. Moiseichev affirm that high economic growth rates in a number of developing countries are, as a rule, related to their increasing involvement in global value chains due to use of large quantities of imported components and materials in manufacturing products, including exports. This growth is extensive and mainly inefficient as most part of value added, according to conclusions of international research reports, is created in services and not in manufacturing11. In fact, a global value chain in electronics looks like a "smile", and a major part of value added is related to services in the right upper part (the beginning of GVC) with R&D, design, brand, and to services in the left upper part of the "smile" - marketing, advertising, after-sale services. But, still, I disagree with Meshkova and Moiseichev. Not so little is left to manufacturers (the share of domestic value added in exports of computer, electronic and optical
11 Meshkova T., Moiseichev E. Analiz global'nykh tsepochek sozdaniia stoimosti: vozmozhnosti Forsait-issledovanii// Forsait. 2016. T. 1, № 10. S. 69-82. S. 70.
equipment being from 30% in case of Cambodia (not a big exporter) to 60% in case of Singapore). The share of countries that perform assembly of electronics in final value added of products is not high (a well-known example: the share of China in the cost of a model of i-phone was only 10%). But it should be taken into consideration that economic growth is the growth of Gross Domestic Product (value added created in the country within a certain period, usually a year). When a country starts to assemble manufactured goods for exports, the assembly contributes to growth of GDP, employment, incomes of population, has a significant multiplier effect. More than that, a country's participation in GVCs evolves as it can be seen in the trajectories of shares of foreign value added in exports of computer, electronic and optical equipment in Southeast Asian countries (graphs 3-6). Some countries improve their positions in GVCs, move to an upper stage, develop R&D - it refers to newly industrialized countries: South Korea, Taiwan (Province of China) and Singapore, a country of South East Asia. Singapore started from assembly operations and now it is a center of innovations development in the region. Besides that, an important part of foreign value added in electronics in Southeast Asian countries originates within the region, more exactly in the extended region, including not only Southeast Asian countries, but also East Asia: these countries are main sources of electronic components imports for ICT goods in Southeast Asian countries.
Components for ICT goods Southeast Asian countries: exports and imports
Analysis of imports and exports of electronic components allows "tracing" supply chains and it gives an idea of trajectories of global value chains. The international division of labour in electronics industry of Southeast Asian countries becomes more advanced: some countries are specializing mainly on electronic components (EC) manufacturing - Singapore, the Philippines, other countries (Vietnam) are engaged mainly in assembly of manufactured goods, third countries combine both specializations (Thailand, Malaysia).
Singapore and Malaysia are two leading ICT goods exporters among Southeast Asian countries. Singapore, at the present time, is mainly exporting electronic components. The share of electronic components in ICT goods exports of Singapore in 2000-2013 increased from 46.6% to 74.3%12.
The volume and structure of international trade in electronics prove the evolving role of countries in the international division of labour. Asian developing countries became involved in the international division of labour in electronics since 1960-1970-s when there was a transfer of labour-intensive, export-oriented industries and stages of production cycles (stages of value chains), inter alia in electronics, from developed countries to developing countries of Asia and Latin America. At first electronic components for assembly of manufactured goods were supplied by
developed countries, from which the production cycles stages originated. But by 2013 the major share of electronic components was imported from Asian countries.
Trade in ICT goods and electronic components for ICT goods illustrates changes taking place in international division of labour, in world architecture of global value chains. Southeast Asian and East Asian countries have become main suppliers of electronic components for ICT goods to the world market. The share of Southeast Asian countries in world exports of electronic components for ICT goods in 2015 reached 23%, the share of developing countries of East Asia - 55.4%, taken together it is equal to 78.4% (four fifths!) of world exports of electronic components for ICT goods13.
Table 3
Exports of ICT goods and electronic components (EC) from Singapore and Malaysia within the region: 2000, 2013 ($ B).
Countries /Groups of countries Goods categories Exports ($ B)
Singapore Malaysia
2000 2013 2000 2013
All countries ICT goods 75.8 122.8 51.7 64.4
EC 35.3 91.2 18.5 37.0
East Asia ICT goods 15.9 56.2 6.6 22.3
EC 9.3 49.1 3.4 16.5
Southeast Asian countries ICT goods 16.2 26.3 13.5 14.7
EC 10.3 14.7 7.0 8.1
China ICT goods 2.2 20.3 1.1 12.4
EC 1.0 18.3 0.4 8.7
Singapore ICT goods X Х 10,9 9,8
EC X Х 5.8 7.4
Hong Kong (China) ICT goods 5.2 25.7 2.4 6.7
EC 3.1 22.9 1.1 5.4
Taiwan (Province of China) ICT goods 5.4 8.4 1.9 1.9
EC 3.6 7.8 1.2 1.6
Republic of Korea ICT goods 3.1 8.1 1.2 1.3
EC 1.6 7.3 0.7 0.8
Malaysia ICT goods 12.1 11.4 X Х
EC 8.3 8.1 X Х
Vietnam ICT goods 2.7 0.9
EC 2.0 0.4
Thailand ICT goods 2.4 4.9 1.6 3.7
EC 1.2 3.2 0.7 1.0
the Philippines ICT goods 1.3 2.0 0.6
EC 0.7 1.0 0.4
Source: Bilateral trade flows by ICT goods categories, annual, 2000-2013. Information Economy. http://unctadstat.unctad.org/wds/ TableViewer/tableView.aspx=15850 (12.04.2015).
13 Tsvetkova N. South-East Asian Countries in International Division of Labour: ICT goods exports, 2000-2015 // Vostochnaya Analitika, 2018, No. 3.
In the author's monograph "Information and communication technologies in Asian countries: ICT goods and IT-services production and exports" (2016), a detailed analysis of Asian countries ICT goods and electronic components (EC) exports and imports in 2000-2013 has been performed14. In 2000 Singapore was the third world exporter of EC for ICT goods ($35.3 B). 55.5% of its electronic components exports were directed to Southeast Asian and East Asia countries, with Malaysia (23.5% of Singapore EC exports), Taiwan (10.2%), Hong Kong (China) (8.8%), Thailand (3.4%) and China (3.1%) being main directions of exports.
Malaysia in 2000 was the sixth world exporter of electronic components ($18.5 B). 56.2% of its electronic components exports were directed to Southeast Asian and East Asian countries, with 31.6% of the exports going to Singapore, 6.5% to Taiwan, 5.9% to Hong Kong, 2.7% to the Philippines and South Korea.
By 2013 mutual exports of electronic components in Southeast Asian and East Asian countries have increased significantly, outpacing many-fold exports of electronic components to the region from developed countries. If in 2000 only 3.1% of electronic components exports from Singapore and 2.2% from Malaysia were directed to China, by 2013 China has become the priority destination of electronic components exports from Singapore ($18.3 B; 20.1%), Malaysia (23.5%). 25.1% electronic components exports from Singapore and 18.1% from Malaysia went to Hong Kong (China), mainly for subsequent re-exports. Malaysia (8.9% of EC exports), Taiwan (8.6%), South Korea (8.0%), the Philippines (2.2%) and Vietnam (2.2%) were also important markets for Singapore's EC exports in 2013. Exports of electronic components from Malaysia in 2013 were directed, in the first place, to Singapore (20% of EC exports), other important export destinations beingTaiwan (4.6%) and Thailand (2.7%) (calc. on data from table 3).
Thailand and the Philippines, also since the 1970-s, have been involved in the international and regional division of labour in electronics, with the Philippines specializing on exports of electronic components (HDD, in the first place) and Thailand, on exports of computer equipment and electronic components. Vietnam has begun to take part in the regional division of labour specializing on assembly of manufactured goods, mainly mobile phones, quite recently, after 2005. The first exporter of electronic components into Vietnam is South Korea ($3.6 B in 2013); there are affiliates of South Korean companies Samsung Electronics and LG in the country. Singapore ($2.0 B) and China are also leading EC exporters to Vietnam ($1.3 B); their exports of EC exceed the exports of Japan ($0.8 B).
Leading exporters of electronic components to the Philippines are South Korea ($2.4 B), USA (2d rank; $2.1 B; there exist traditional close relations with the former metropole), Taiwan ($1.9 B), Japan ($1.3 B), Singapore ($1.0 B). Singapore ($3.2 B), Japan ($1.9 B), the USA ($1.4 B) and Taiwan ($1.2 B) are main exporters of electronic components into Thailand15.
14 Tsvetkova N.N. Informatsionno-kommunikatsionnye tekhnologii v stranakh Vostoka: proizvodstvo tovarov
IKT i IT-uslug. M.: IV RAN; Izdatel' Vorob'ev A.V., 2016. S. 58-78.
South-EastAsianCountriesinInternationalDivisionof Labour: ICTgoodsexports,2000-2015
Table 4
Partners of Southeast Asian countries for imports of ICT goods including electronic components (EC) in 2013 (imports, $ B)
Importers Imports, by Sources of imports ($ B)
All countries, including: China Taiwan South Korea Hong Kong Malaysia Singapore the Philippines Thailand Viet nam Japan USA Other important partners
Singapore Germ.
ICT goods 92.8 19.8 21.6 12.6 0.7 12.8 Х 4.1 2.2 0.9 3.6 5.4 1.8
EC 65.2 8.0 20.3 12.0 0.2 8.8 Х 3.8 1.1 0.2 2.4 3.1 1.5
Malaysia Germ.
ICT goods 46.6 11.6 4.9 2.5 1.4 Х 4.6 0.7 1.8 2.7 3.5 5.6 1.8
EC 32.5 5.8 4.3 2.0 0.5 Х 3.4 0.65 0.7 1.6 3.0 4.8 1.7
Philippines Germ.
ICT goods 15.1 1.4 2.1 0.7 0.7 0.7 1.5 Х 0.7 0.06 1.6 3.5 1.1
EC 11.0 0.1 1.9 0.6 0.2 0.5 0.9 Х 0.5 0.9 3.2 1.0
Thailand Germ.
ICT goods 28.3 10.3 2.4 1.1 0.2 3.9 1.3 0.8 Х 1.2 2.9 1.8 0.3
EC 12.0 1.7 2.0 0.8 0.1 1.2 1.0 0.5 Х 0.03 2.2 1.1 0.2
Vietnam Ireland
ICT goods 26.3 11.0 0.9 7.4 0.04 0.9 1.8 0.42 0.3 Х 1.4 0.6 0.8
EC 12.4 1.8 0.7 4.4 0.01 0.5 1.7 0.4 0.2 Х 1.2 0.5 0.7
Source: Bilateral trade flows by ICT goods categories, annual, 2000-2013. Information Economy. http://unctadstat.unctad.org/wds/ TableViewer/tableView.aspx=15850. (access date: 12.04.2015).
Imports of ICT goods into Singapore in 2013 reached $92.8 B, with the share of electronic components in it equal to 70.3%. Main sources of imports of ICT goods for Singapore were Taiwan (23.3% of imports; $21.6 B, the share of electronic components amounting to 94.0%), China (21.3%; $19.8 B, with the share of EC equal to 40.4%), Malaysia (13.8%; $12.8 B, the share of EC of 68.8%), South Korea (13.6%; $12.6 B, with the share of EC equal to 95.2%). Electronic components were imported into Singapore mainly from Taiwan ($20.3 B; 31%) and South Korea ($12.0 B, 18.4%), with these two newly industrialized countries supplying more than a half of EC components imports into Singapore. Besides that, 13.5% of EC imports into Singapore originated from Malaysia, 12.3% - from China, 5.8% - from
the Philippines (calc. on data from table 4). EC imports into Singapore from the USA or Japan, or Germany were inferior to such imports from the Philippines alone.
Imports of ICT goods into Malaysia in 2013 reached $46.6 B, with the share of electronic components in it equal to 69.7%. Main sources of imports of ICT goods for Malaysia were China (24.9%; $11.6 B, the share of EC reaching 1/2), the USA (12.0%; $5.6; the share of EC, 85.7%), Taiwan (10.5%; $4.9 B; the share of EC reaching 87.8%), Singapore (9.9%; $4.6 B; with the share of EC equal to 73.9%), Japan (7.5%; $3.5 B, with 85.7% of imports being electronic components). The share of the USA and Japan in ICT imports into Malaysia in 2013 amounted to 19.5%. Electronic components were imported mainly from China (17.8%), the USA (14.8%), Taiwan (13.2%), Singapore (10.5%) and Japan (9.2%). Only 25% of EC imports originated from the USA and Japan - former main providers of electronic components to Asia, while the share of 5 Southeast Asian and East Asian countries: China, Taiwan, Singapore, South Korea, Vietnam, reached 47.7%.
In 2013 imports of ICT goods into Thailand amounted to $28.3 B, including imports of electronic components of $12.0 B (42.4% of ICT goods imports). Main partners of Thailand in ICT goods imports were China (36.4%; $10.3 B; the share of EC was 16.5%), Malaysia (13.8%; $3.9 B, with the share of EC equal to 30.8%), Japan (10.2%; $2.9 B; the share of EC was 75.9%), Taiwan (8.5%; $2.4 B; with EC share of 83.3%), the USA (6.4%; $1.8 B; the share of EC was 61.1%). Majority of ICT goods, mainly manufactured products, were imported into Thailand from China and Malaysia. Japan was the first as a source of EC imports (24.2%), as Japanese electronics companies have numerous affiliates in Thailand and supply them with components. Taiwan was second in EC imports to Thailand (16.7%), China was third (14.2%), Malaysia - fourth (10%), the USA - fifth (9.2%). The share of Taiwan, China, Malaysia, Singapore in Thailand's EC imports amounted to 49.2%, while the share of Japan and the USA was 33.4%.
Imports of ICT goods into Vietnam in 2013 reached $26.3 B, with EC imports of $12.4 B (47.1% of imports). Leading partners in ICT goods imports were China (41.8% of imports; $11.0 B; with the EC share of 16.4%), South Korea (28.1%; $7.4 B; the share of EC being 59.5%), Singapore (6.8%; $1.8 B; mainly EC, 94.4%), Japan (5.3%; $1.4 B, with the share of EC of 86% ($1.2 B), Taiwan (3.4%; $0.9 B, with EC imports of $0.7 B). Imports of ICT goods from China (41.8%) and South Korea taken together constitute 70% of total ICT goods imports into Vietnam. China was a major partner in imports of manufactured ICT goods, while South Korea was mainly supplier of electronic components. 35.5% of EC imports into Vietnam originated from South Korea, which was home to TNCs having large affiliates in Vietnam, such as Samsung Electronics. The share of China in EC imports was 14.5% and that of Singapore, 13.7%. 80% of ICT imports and 69.3% of EC imports into Vietnam originated from 4 Southeast Asian and East Asian countries: China, South Korea, Singapore and Taiwan. Japan accounted only for 5.3% of ICT goods and 10% of EC imports. EC imports geographical pattern shows the way global value chains are organized, companies from what countries are "directing" these chains -in case of Vietnam's electronics industry they are companies from South Korea.
ICT goods imports into the Philippines in 2013 reached $15.1 B, with EC share of 72.8%. Main import partners for ICT goods were the USA, former metropole (23.2%; $3.5 B, with the EC share of 91.4%); Taiwan (13.9%; $2.1 B; with the EC share of 90.5%), Japan (10.6%; $1.6 B; the share of EC was 56.3%), Singapore (9.9%; $1.5 B; the share of EC was 60%), China (9.3%; $1.4 B; with the share of EC of 7%). The Philippines had the highest aggregate share of the USA and Japan in ICT goods and EC imports (33.8% and 37.3%). American electronics transnationals have many affiliates in the Philippines. But, still, the share of Southeast Asian and East Asian countries was higher: they accounted for 39.2% of EC imports (calc. on data from table 4).
It can be stated that an intra-regional division in ICT goods production has emerged, not within the framework of Southeast Asia, or ASEAN, alone, but within the framework of a vast region of Southeast and East Asia comprising, besides Southeast Asia, also China, its special region Hong Kong (China), which is a center of re-exports, South Korea and Taiwan. EC exports from Singapore and Malaysia flow to China and Hong Kong. Exports of electronic components from Singapore and Malaysia are directed not only to countries with cheaper labour (workforce in China has ceased to be cheaper than that in Malaysia), but also to South Korea and Taiwan.
The division on labour between China, Malaysia, Vietnam, the Philippines and Thailand, on the one hand, and South Korea, Taiwan, Singapore, on the other hand, is based on comparative advantages. But mutual exports are also high between South Korea, Taiwan, Singapore that have similar comparative advantages and no significant gaps in wages. In 2013 Singapore received exports of electronic components from Taiwan ($12.0 B), Malaysia ($7.4 B), South Korea ($5.5 B), that were higher than EC exports to Singapore from the USA and Japan ($2.1 B and $2.0 B). Taiwan was an important export market for electronic components from Singapore ($7.8 B), South Korea ($3.8 B). South Korea was an export market for electronic components from Singapore ($7.3 B), Taiwan ($7.0 B)16. The division of labour that is being formed between Singapore, South Korea and Taiwan is based not on comparative advantages, but on economies of scale within one industry in international trade studied by an American Nobel Prize (2008) winner Paul Krugman. By having integrated economies of scale into explicit economic equilibrium models, Paul Krugman has deepened our understanding of the determinants of trade and the location of economic activity. P. Krugman states that trade remains beneficial in general, even between similar countries, because it permits firms to save on costs by producing at a larger, more efficient scale, and because it increases the range of brands available and sharpens the competition between firms, contributes to cutting costs and prices17.
16 Tsvetkova N.N. Informatsionno-kommunikatsionnye tekhnologii v stranakh Vostoka: proizvodstvo tovarov IKT i IT-uslug. M.: IV RAN; Izdatel' Vorob'ev A.V., 2016. S. 68-71.
17 Krugman P., Obstfeld M. Mezhdunarodnaia ekonomika. SPb.: Piter, 2004, S. 188, 189. [International Economics, in Russian].
Specialization and cooperation are being developed between countries of Southeast and East Asia. It is a specialization on producing particular components and performing certain stages of manufacturing within global value chains. Country 1 produces one type of components, country 2 - second type of components; assembly is performed in country 3, but the entire process is integrated and directed by TNCs within GVCs. R&D that define the "core" of a brand are performed in developed countries; knowledge-intensive stages are located in newly industrialized countries while labour-intensive operations - assembly of manufactured goods and manufacturing relatively simple electronic components are transferred to countries with cheap labour. This division of labour can be intra-corporate. Components, in this case, are manufactured by affiliates of TNCs or by long-term contractors of TNCs working under the system of contract manufacturing. I-phones, for example are assembled not by Apple affiliates, but by affiliates of companies from Taiwan -Hon Hai (Foxconn) and Pegatron - in China. Hon Hai also has affiliates in Vietnam.
Participation of the USA and Japan in exports of electronic components to Southeast Asia has shrunk or has been "frozen" in the context of rapidly growing mutual trade in electronic components of the countries of the region - not Southeast Asia alone, but Southeast and East Asia. But the USA and Japan maintain their immense scientific and technical superiority. Suffice it to recall, products of what brands Asian countries are manufacturing, though at present the popularity of brands of South Korean, Chinese, Taiwanese electronics companies - such as Samsung, LG, Huawei, Lenovo, Xiaomi, - increases. Nowadays leading developed countries manufacture and export not electronic components, but robots and automated system, but it is a subject for another research.
Practically for all countries of Southeast and East Asia, the countries of their own region have become main sources of imports of ICT goods in general and electronic components, in particular. Important parts of global value chains are located within the region, with the exception of initial points of the "smile" (a graph representing a trajectory of a value chain in electronics) - R&D, design, "payments" for a brand, and final points - sales, marketing after-sale services. A high share of electronic components in exports and imports is a proof of a high level of the regional division of labour in Southeast and East Asia, of development of cooperation in electronics production and inclusion of the countries into global value chains, on advanced regional integration at the level of microeconomics (cooperation between enterprises).
Countries of Southeast and East Asia have occupied important positions in the international division of labour in electronics. They accounted for 15% of world ICT goods exports in 2015. Transfer by TNCs of labour-intensive industries and stages of production (including electronics industries) to these countries from developed countries since 1960-s - 1970-s contributed to it, as well as transfer of these industries and stages of production from newly industrialized Asian countries in 1990-s - 2000-s, for example, from South Korea to Vietnam. Affiliates of transnationals have been playing an important role in this process. But today
they are not only affiliates of TNCs from Western countries and Japan, but also of TNCs from Asian countries.
Southeast Asian countries have entered the XXI century as acknowledged leading exporters of ICT goods. But the trajectory of their ICT goods exports in 2000-2015 was not as steep as the trajectory of China's exports; their exports grew by 70% with China's exports growing four-fold. Still, they have succeeded to maintain their positions. Competition with China on the markets of computer, telecommunications equipment, consumer electronics and electronic components for ICT goods is very severe for them: China is a strong rival. But besides this competition, cooperation is also evolving. An important proportion of electronic components exports from leading exporters of this category of goods among Southeast Asian countries - Singapore and Malaysia - was directed to China and its special region Hong Kong. Taiwan and South Korea were also important export markets for electronic components from Southeast Asian countries. An intra-regional division of labour has been formed in the region, not within Southeast Asia (ASEAN), but in a more extended region of Southeast and East Asia. In the entire region there is a web of networks of global value chains in electronics industry. These global chains are directed by TNCs from Western countries and Asian countries. And these TNCs use in GVCs not only their affiliates but also numerous contractors involved in non-equity forms of international production. It should be mentioned that electronics industry may become affected by the impact of new labour-saving technologies, robotic and automation18, global value chains may collapse like a house of cards and may be replaced by highly automated production in a single country, but this is another story, a subject for special research.
18 Akimov A.V. Trudosberegaiushchie tekhnologii i obshchestvennoe razvitie v XXI veke // Vostok (Oriens). 2015. № 1.
