Economic Research Institute for ASEAN and East Asia
The Spatial Structure of Production/Distribution Networks and Its Implication for Technology Transfers and Spillovers
This paper argues that a variety of firm specificity supported by sophisticated inter-firm relationships is essential for understanding the mechanics and spatial structure of international production/distribution networks in East Asia. By mapping the two-dimensional fragmentation framework (Kimura and Ando (2005)) into geographical space, the paper proposes the concept of four layers of transactions in production/distribution networks: (i) local, (ii) sub-regional, (iii) regional, and (iv) the world. The concept effectively bridges geographical extensions of production/ distribution networks and the nature of transactions in terms of intra-firm vs. arm's-length as well as technological/managerial conditions. In addition, the paper discusses the implications of such geographical structure of production/distribution networks for technology transfers/spillovers from multinationals to local firms and claims its importance in new development strategies.
