fragmentation, the crisis and asia
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Fragmentation, the Crisis and Asia. L Alan Winters Chief Economist, Department for International Development, Professor of Economics, University of Sussex And Xinyi Li, University of East Anglia. Fragmentation. Of production Vertical specialisation/integration Via trade data - PowerPoint PPT PresentationTRANSCRIPT
Fragmentation, the Crisis and Asia
L Alan Winters
Chief Economist, Department for International Development,Professor of Economics, University of Sussex
And Xinyi Li, University of East Anglia
Page 2
Fragmentation
• Of production• Vertical specialisation/integration
A. Via trade data
B. Via Input-Output data• Has it worsened contagion/transmission?
• Of the world economy • Trade policy
Page 3
Trade Shock
• Huge fall since September 2008• Determinants of speed and depth• Exports
• Monthly• 180 countries (Direction of Trade)• Only upto March 2009
Page 4
Exports23
.223
.423
.623
.8E
xpo
rts
(in
log
ari
thm
)
2007m1 2007m7 2008m1 2008m7 2009m1Report Month
Malaysia Exports
Page 5
Filter into trend and residual
• Hodrick-Prescott – high-pass filter
Ttcgy ttt , ,2 ,1for
2
1211
1
2
}{
)(T
ttttt
T
tt
g
ggggcMint
Set λ = 129,600
Page 6
2002m1 2003m1 2004m1 2005m1 2006m1 2007m1 2008m1 2009m1Report Month
Export_Trend Cyclical_Export
Japanese Export (Seasonal Adjusted & Smoothed)
Page 7
2002m1 2003m1 2004m1 2005m1 2006m1 2007m1 2008m1 2009m1Report Month
Export_Trend Cyclical_Export
Indonesian Export (Seasonal Adjusted & Smoothed)
Page 8
Three concepts of ‘hit’
• ‘First Hit’: first month after January 2007 with a negative residual exceeding two standard deviations; if none, ‘not yet’
• ‘Most Severe Hit’: The largest shortfall of exports relative to the smoothed trend
• ‘Largest Hit’: The largest month-on-month fall of exports
Page 9
First Hits
Time Distribution of Countries' First Hit in Export
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
High Income East Asia &Pacific
Europe &Central Asia
LatinAmerica &Caribbean
Middle East& NorthAfrica
South Asia Sub-Saharan
Africa
2007m1 - 2008m10
2008m11
2008m12
2009m1
2009m2 Onwards
Not Yet
Page 10
Vertical Specialisation
• Hummels et al• share of foreign intermediates in export
value• Pitigala – trade data approximation
• Intermediate imports/exports• Here
• intermediate imports/total imports• Averaged over 1995-2008, 165 countries
Page 11
First Hit
Early impact
Late impact
not yet
total
low VS 19 36 27 82 high VS 40 32 11 83 total 59 68 38 165
Low VS – below median of sample (approx 43%)
Early: 2008, late 2009 Jan-Mar; not yet – no residual < -2σ
Page 12
First Hits in Asia
Early impact
Late impact
not yet
total
low VS 1 4 3 8 high VS 5 7 1 13 Total 6 11 4 21
Low VS: Solomon Islands Tonga, Vanuatu, Samoa, Mongolia, Fiji, Afghanistan, Maldives; High VS: Papua New Guinea, Indonesia, Vietnam, Cambodia, Thailand, China, Malaysia, Philippines, Pakistan, India, Nepal, Sri Lanka, Bangladesh
Page 13
Average Depth of First HitLow High
Total -0.452 -0.311Region
EAP -0.599 -0.201ECA -0.372 -0.431HIC -0.408 -0.284LAC -0.472 -0.390MNA -0.325 -0.355SAS -0.521 -0.210SSA -0.552 -0.333
Residual of log(exports) from trend
Page 14
VS – an Input Output Measure
• 9 Asian countries and USA, 2000• Flows by industry and country
ΔX = (I-A)-1 ΔY
(I-A)-1 = I + A + A2 + A3 +
ΔX1 = ΔY
ΔX2 = ΔY + AΔY = (I + A) ΔY
ΔX3 = ΔY + AΔY + AAΔY = (I + A + A2) ΔY
Page 15
Period 1 and 2 export losses, US shockFig 4B Export Loss, US Shock, %
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
CHN IDN JPN KOR MYS TWN PHL SGP THA
Period 1 Period 2
Page 16
Cumulative VS scoresCumulative VS(IO) scores
0.0%0.5%1.0%
1.5%2.0%2.5%3.0%
3.5%4.0%
Period1
Period2
Period3
Period4
Period5
ex
po
rt lo
ss
%
CHN
IDN
JPN
KOR
MYS
TWN
PHL
SGP
THA
Page 17
Export Losses vs. Cumulated VSExport Loss vs VS(IO)
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0
-4.00% -3.00% -2.00% -1.00% 0.00%
Page 18
Examples of Measures
Number of juris-dictions implementing
Number of juris-dictions affected
Number of tariff lines affected
Number of sectors affected
Bail out / state aid 77 35 150 156 21Public procurement 28 11 133 368 27Tariff measure 76 16 114 464 34Trade defence measure 167 41 104 307 31Source: Global Trade Alert, accessed 27th October 2009
Of measures deemed red
Measures in database
Page 19
Measures Imposed
Country Allexcl trade defence All
excl trade defence All
excl trade defence
Bangladesh 0 0 0 0 0 0China 22 10 163 137 329 325Hong Kong 0 0 0 0 0 0India 40 7 141 140 210 203Indonesia 12 11 124 124 311 311Japan 9 4 97 97 133 130Malaysia 4 4 98 98 26 26Vietnam 6 5 28 28 14 14
No. of Red or No of Partners No of tariff lines
Page 20
Measures Suffered
Allexcl trade defence All
excl trade defence
Bangladesh 20 19 11 11China 224 128 56 51Hong Kong 49 44 45 44India 85 77 45 45Indonesia 74 57 41 41Japan 120 103 46 45Malaysia 80 65 43 43Vietnam 54 51 42 42
No. of Red or No of Jurisdictions
Page 21
Thank you
Page 22
Time Distribution of Countries' Most Severe Hit in Export
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
High Income East Asia &Pacific
Europe &Central Asia
LatinAmerica &Caribbean
Middle East& NorthAfrica
South Asia Sub-Saharan
Africa
2007m1-2008m10
2008m11
2008m12
2009m1
2009m2
2009m3
Page 23
Time Distribution of Countries' Biggest Drop in Export
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
High Income East Asia &Pacific
Europe &Central Asia
LatinAmerica &Caribbean
Middle East& NorthAfrica
South Asia Sub-Saharan
Africa
2007m1-2008m8
2008m9-2008m10
2008m11
2008m12
2009m1
2009m2 onwards