Economic Integration in Asia: Progress and Challenges

Transcription

1 Economic Integration in Asia: Progress and Challenges Cyn Young Park Director, Regional Cooperation and Integration Division Economic Research and Regional Cooperation Department (ERCD) Asian Development Bank 4th IMF-Hitotsubashi Seminar on Macroeconomic and Financial Issues Advances and Challenges in Regional Integration March 3-4, 2016, Tokyo

2 Outline Progress of Regional Economic Integration Business Cycles and Growth Spillovers Trade Integration and Regional Value Chain Trade slowdown and PRC Factors Global trade slowdown: Cyclical and Structural factors Structural transformation in PRC Financial integration and volatility Structural patterns of capital flows to Asia FDI vs. Portfolio and other investment 2

3 Progress of regional economic integration

4 Growth of ASEAN+3 less correlated with the US ASEAN+3 Business Cycle Correlation with US ASEAN-4 NIE-3 PRC JPN Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 Note: ASEAN-4 includes Indonesia, Malaysia, Philippines, and Thailand. NIE-3 includes Hong Kong, China; Republic of Korea; and Singapore. Three-year moving correlations based on cyclical Hodrick-Prescott filtered seasonally-adjusted gross domestic product at constant prices. Source: ADB calculations using data from Haver Analytics and national sources.

5 Growth of ASEAN+3 more correlated with Japan recently ASEAN+3 Business Cycle Correlation with Japan ASEAN-4 NIE-3 PRC Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 Note: ASEAN-4 includes Indonesia, Malaysia, Philippines, and Thailand. NIE-3 includes Hong Kong, China; Republic of Korea; and Singapore. Three-year moving correlations based on cyclical Hodrick-Prescott filtered seasonally-adjusted gross domestic product at constant prices. Source: ADB calculations using data from Haver Analytics and national sources.

6 Growth of ASEAN+3 also more correlated with PRC recently ASEAN+3 Business Cycle Correlation with the PRC ASEAN-4 NIE-3 JPN Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 Note: ASEAN-4 includes Indonesia, Malaysia, Philippines, and Thailand. NIE-3 includes Hong Kong, China; Republic of Korea; and Singapore. Three-year moving correlations based on cyclical Hodrick-Prescott filtered seasonally-adjusted gross domestic product at constant prices. Source: ADB calculations using data from Haver Analytics and national sources.

7 Asian economies more vulnerable to growth shock from PRC and their own domestic shocks Share of Asian output variance due to external and local factors (%, x-axis = # of quarters) Pre-GFC = 2001Q1 to 2008Q1; Post-GFC = 2009Q1 to 2015Q2. Average for sample economies. Source: ADB calculations. AEIR 2015: Progress of Regional Economic Integration 7

8 Correlation between growth in ASEAN+3 exports and US non-oil imports s s s Jan-90 Apr-91 Jul-92 Oct-93 Jan-95 Apr-96 Jul-97 Oct-98 Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jul-07 Oct-08 Jan-10 Apr-11 Jul-12 Oct-13 Jan-15 ASEAN+3 US non-oil imports Correlation (RHS) Note: ASEAN+3 refers to ASEAN including PRC; Hong Kong, China; Japan; and Korea, Rep. of. US non-oil imports computed by subtracting imports of energy-related petroleum products and crude petroleum. Source: ADB calculation using data from CEIC: (US Census Bureau) and Direction of Trade Statistics, International Monetary Fund (IMF).

9 Correlation between growth in NIE-3 exports and PRC non-oil imports Jan-90 Feb s Mar-92 Apr-93 May-94 Jun-95 Jul-96 Aug-97 Sep-98 Oct-99 NIE-3 PRC non-oil imports Correlation (RHS) NIE-3 = Hong Kong, China; Korea, Rep. of; and Singapore. Note: non-oil imports computed by subtracting mineral fuel, lubricants, and related materials imports from the sum of total primary, manufactures, and commodities n.e.s based on SITC. Source: ADB calculation using data from CEIC and Direction of Trade Statistics, International Monetary Fund (IMF) Nov s Dec-01 Jan-03 Feb-04 Mar-05 Apr-06 May s Jun-08 Jul-09 Aug

10 Correlation between growth in ASEAN exports and PRC non-oil imports Jan-90 Feb s Mar-92 Apr-93 May-94 Jun-95 Jul-96 Aug-97 Sep Oct-99 Nov s Dec-01 Jan-03 Feb-04 Mar-05 Apr-06 May s Jun-08 Jul-09 Aug ASEAN PRC non-oil imports Correlation (RHS) Note: non-oil imports computed by subtracting mineral fuel, lubricants, and related materials imports from the sum of total primary, manufactures, and commodities n.e.s based on SITC. Source: ADB calculation using data from CEIC and Direction of Trade Statistics, International Monetary Fund (IMF). 10

11 Value-Added Export Decomposition, 2000 ASEAN % ASEAN+3 Total final demand 34.2% Final Demand 8.7% [1.4%] ASEAN % [5.9%] 11.5% [3.3%] Production 18.1% [4.4%] Production 40.1% Rest of the World 73.2% 26.1% Final Demand 33.1% ROW Total final demand 65.8% G2 39.9% Others 26.0% 6.6% 14.0% Value-added export decomposition = Domestic value-added + Returned domestic value Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

12 Value-Added Export Decomposition, 2005 ASEAN % Total final demand 35.8% ASEAN+3 Final Demand 9.0% [1.8%] ASEAN % [8.5%] 11.9% [4.2%] Production 19.9% [6.7%] Production 40.6% Rest of the World 71.1% 25.7% Final Demand 30.5% ROW Total final demand 64.2% G2 41.4% Others 22.8% 8.0% 14.9% Value-added export decomposition = Domestic value-added + Returned domestic value Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

13 Value-Added Export Decomposition, 2011 ASEAN % Total final demand 35.6% ASEAN+3 Final Demand 8.5% [2.0%] ASEAN % [9.5%] 13.1% [5.3%] Production 19.9% [7.5%] Production 40.7% Rest of the World 71.6% 26.8% Final Demand 30.9% ROW Total final demand 64.4% G2 32.6% Others 32.8% 6.8% 13.9% Value-added export decomposition = Domestic value-added + Returned domestic value Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

14 Trade slowdown and PRC factors

15 Asia s overall trade growth slows Trade and GDP Growth (%) Asia World GDP Total Trade GDP Total Trade Fall in trade growth due to: Sluggish demand recovery in advanced economies. Growth moderation in PRC. Slower pace of expansion in global and regional value chains. 15

16 G-7 share is declining while PRC share rising Shares in world trade volume (% of world trade volume) e G-7 BRICS ex PRC PRC NIES ASEAN ex SIN ROW G-7 = UK, US, France, Germany, Japan, Italy, and Canada. Note: Trade volume is estimated by using annual trade volume growth rates on 2001 trade values and extending the series in the specified years trade estimates using 3-year compounded average growth rate. Source: ADB calculations using data from World Trade Organization Trade Statistics. 16

17 G-7 and PRC contribute around a half of world trade growth Contribution to world trade volume growth (% of world trade volume growth) e G-7 BRICS ex PRC PRC NIES ASEAN ex SIN ROW World G-7 = UK, US, France, Germany, Japan, Italy, and Canada. Note: Trade volume is estimated by using annual trade volume growth rates on 2001 trade values and extending the series in the specified years trade estimates refers to WTO's latest forecast last September Source: ADB calculation using data from WTO Trade Statistics. 17

18 Significant trade links within and across subregions Gravity Model Results Central Asia East Asia South Asia Southeast Asia The Pacific & Oceania Intrasubregional trade All goods 4.3** 3.3** 0.9** 4.3** 0.7 Capital 3.7** 1.2** 1.7** 2.5** 0.2 Consumption 4.5** 2.5** 1.1** 3.6** -0.5 Intermediate 3.4** 3.7** ** -0.2 Intersubregional trade All goods 0.7* 0.6* 3.8** 0.8** 1.7** Capital ** Consumption 0.8* 0.8** 3.5** 0.7* 2.2** Intermediate ** * 18

19 Asia s Trade Linkage, 2014 (Numbers in parentheses = 2010) Asian Subregional Trade Linkages, 2014 (Numbers in parentheses = 2010) Note: Based on trade intensity (or trade bias), which is the ratio of the trading partner s share to a country/region, and the share of world trade with the same trading partner. It is calculated as (Tij/Ti)/(Tj/Tw), where Tij is the dollar value of total trade of i with j; Ti is the dollar value of total trade of i with world; Tj dollar value of total trade of j with world; and Tw total world trade. Source: ADB calculation using data from Direction of Trade Statistics, International Monetary Fund. 19

20 Trade Links with the rest of the World East Asia and Southeast Asia, 2014 (Numbers in parentheses = 2010) Note: Based on trade intensity (or trade bias), which is the ratio of the trading partner s share to a country/region, and the share of world trade with the same trading partner. It is calculated as (Tij/Ti)/(Tj/Tw), where Tij is the dollar value of total trade of i with j; Ti is the dollar value of total trade of i with world; Tj dollar value of total trade of j with world; and Tw total world trade. Source: ADB calculation using data from Direction of Trade Statistics, International Monetary Fund. 20

21 Regional value chains are deepening DVA = domestic value added, FVA = foreign value added, RDV = returned domestic value added, PDC = pure double counting component. 21

22 PRC s structural transformation presents both challenges and opportunities PRC s imports from Asia ($ billion) Top 20 Asian Exporters to the PRC (% of country s total exports, 2014) 22

23 Commodity Prices (nominal monthly, 2010=100) 300 Commodity prices have declined (again) since 2012 Energy Fertilizers Precious Metals Agriculture Metals & Minerals Real Commodity Prices (2010=100, annual, based on 2005 US$) 250 Energy Fertilizers Precious Metals Agriculture Metals & Minerals Jan-00 Sep-00 May-01 Jan-02 Sep-02 May-03 Jan-04 Sep-04 May-05 Jan-06 Sep-06 May-07 Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan Note: Monthly indexes based on nominal US dollars, 2010=100. Source: World Bank Commodity Price Data (the Pink Sheet) Note: Annual indexes, 2010=100, 1960 to present, real 2005 US dollars. Source: World Bank Commodity Price Data (The Pink Sheet). 23

24 Some countries heavily dependent on commodity exports are hit by double whammies Top Commodity Exporters' Commodity Export Share 2014 (% of economy's total exports) PRC Rest of the World SLE CAF MSR QAT MON MWI PRY BRU MRT NER ZWE AUS MOZ ARM RWA BEN PER GIN CHL BHS TZA BRA MNE ARM=Armenia; AUS=Australia; BEN=Benin; BHS=Bahamas; BRA=Brazil; BRU=Brunei Darussalam; CAF=Central African Rep.; CHL=Chile; GIN=Guinea; MNE=Montenegro; MON=Mongolia; MOZ=Mozambique; MRT=Mauritania; MSR=Montserrat; MWI=Malawi; NER=Niger; PER=Peru; PRY=Paraguay; QAT=Qatar; RWA=Rwanda; SLE =Sierra Leone; TZA=United Rep. of Tanzania; ZWE=Zimbabwe. Note: Includes economies with commodity exports as % of total exports of more than 30%. Data based on SITC Rev 3. Commodity items include primary consumption goods (primary food and beverages for household consumption ) and selected intermediate goods (primary food and beverages for industry, primary industrial supplies, and primary and processed fuels and lubricants) as defined under Broad Economic Categories. Source: ADB calculations using data from UN Commodity Trade Database. 24

25 Overall trade costs need to be lowered Time to Export and Import by Region (2014, days) Number of Documents to Export and Import in Asia and the Pacific by Subregion (2014) North America European Union LaHn America & Caribbean Europe & Central Asia East Asia & Pacific Middle East & North Africa Southeast Asia East Asia The Pacific Oceania South Asia Sub-Saharan Africa Central Asia Time to export Time to import Documents to export Documents to import Source: World Development Indicators, World Bank. 25

26 Financial integration and volatility

27 6 5 Mexico crisis Financial Stress Index ASEAN+3 Asian crisis, Russian default, and Brazil crisis Turkish stock market crash Argentine crisis Economic impact of SARS outbreak, and Latin America crisis Global financial crisis 1st Greek bailout Euro crisis, Egypt and Indian economic woes Taper Tantrum PRC currency devaluation, and stock market crash US Policy Normalization Jan-95 Oct-95 Jul-96 Apr-97 Jan-98 Oct-98 Jul-99 Apr-00 Jan-01 Oct-01 Jul-02 Apr-03 Jan-04 Oct-04 Jul-05 Note: Based on principal components analysis. Includes People's Republic of China; Hong Kong, China; Indonesia; Japan; Rep. of Korea; Malaysia; Philippines; Singapore; Thailand; Viet Nam Source: ADB staff calculation using Bloomberg, Yahoo! Finance and CEIC 27 Apr-06 Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-13 Jul-14 Apr-15 Dec-15

28 Short-term external debt (% of reserves) SIN HKG JPN MAL INO VIE THA KOR PHI PRC Note: Data used for 2010 for PHI is 2012 and 2011 for THA. Source: ADB calculations using data from International Financial Statistics, IMF; and national sources. 28

29 Net International Investment Position (% of GDP) HKG SIN JPN PRC KOR MAL PHI THA INO Note: Based on BPM-6 data (assets less liabilities). Includes foreign direct investment, portfolio investment, other investment, and foreign reserves refers to end Q for all, except for INO (Q1-2015) and MAL (Q2-2015). Source: ADB calculations using data from International Financial Statistics, IMF; and national sources. 29

30 Change in Foreign Exchange Rate (%) Japan Malaysia Singapore Brunei Darussalam New Zealand Thailand Viet Nam Indonesia Australia Hong Kong, China Philippines Chile Papua New Guinea People's Republic of China Korea, Rep. of Canada Peru Mexico Russian Federation 3 months ending 9 Nov 2015 (% change) 3 months ending 9 Feb 2016 (% change) Note: Based on US$ value of local currency. An increase means appreciation, decrease means depreciation. Source: ADB calculation using Bloomberg. 30

31 Net capital flows turned negative in 2014 and 2015 Net Capital Flows to Asia ($ billion) Q1 2012Q4 2013Q3 2014Q2 2015Q1 Other Investment Debt Equity FDI Net Capital Flow Note: Includes the People's Republic of China; Hong Kong, China; India; Indonesia; Japan; Republic of Korea; Philippines; and Thailand. Source: ADB calculations using data from International Financial Statistics, IMF; and national sources. 31

32 Sources of Financial Flows Asia EUA, 144, 16% ROW, 206, 17% ROW, 286, 31% Asia, 216, 17% US, 161, 17% Asia, 332, 36% US, 577, 46% EUA, 249, 20% Equity, 1248, 24% Debt, 923, 17% Asia, 509, 49% ROW, 257, 24% Bank Lending, 900, 17% FDI, 2216, 42% US, 206, 20% Total Inflows to Asia (cumulative, , $ billion) EUA, -72, -7% ROW, 786, 35% Asia, 1135, 51% EUA, 217, 10% US, 78, 4% FDI = foreign direct investment, EUA = euro area, ROW = rest of the world, US = United States Source: ADB staff calculations using data from ASEAN Secretariat, BIS, IMF, CPIS, OECD, and UNCTAD 32

33 Sources of Financial Flows Asia ROW, -148, -18% EUA, -32, -4% US, 310, 38% Asia, 332, 40% ROW, 631, 45% Asia, 216, 16% US, 369, 27% EUA, 168, 12% EUA, 11, 1% Equity, 1384, 28% Debt, 462, 9% Bank Lending, 1061, 21% ROW, 97, 9% US, 444, 42% Asia, 509, 48% Total Outflows to Asia (cumulative, , $ billion) FDI, 2086, 42% ROW, 69, 3% EUA, 722, 35% US, 160, 8% Asia, 1135, 54% FDI = foreign direct investment, EUA = euro area, ROW = rest of the world, US = United States Source: ADB staff calculations using data from ASEAN Secretariat, BIS, IMF, CPIS, OECD, and UNCTAD 33

34 Asia has become an important source of FDI Total FDI Flows Asia ($ billion) FDI = foreign direct investment, LHS = left-hand scale, RHS = right-hand scale. 34

35 Key Messages PRC slowdown, financial volatility, and weak commodity prices are key downside risks to the outlook PRC business cycle exerts increasingly large influence Asian business cycles Trade growth in Asia slows; (a) Cyclical and structural factors (b) Regional value chain reached its maturity PRC s structural transformation presents both opportunities & challenges for Asia: Renewed financial vulnerabilities underscored by the structural patterns of capital flows to the region: FDI is mostly intra-regional Portfolio and other investments are inter-regional 35

36 Spare Slides 36

37 Gross Exports Decomposition, 2011 ASEAN % Total final demand 38.6% Final Demand 8.3% [1.9%] ASEAN % [10.0%] 10.4% [4.2%] Production 20.7% [8.1%] Production 41.5% Rest of the World 71.0% 21.7% Final Demand 29.5% Total final demand 61.4% G2 33.3% Others 28.1% 10.2% 19.8% Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

38 Gross Exports Decomposition, 2005 ASEAN % Total final demand 38.8% Final Demand 8.9% [1.7%] 9.5% [3.3%] ASEAN % [8.5%] Production 20.2% [6.8%] Production 41.2% Rest of the World 70.9% 20.8% Final Demand 29.8% Total final demand 61.2% G2 41.3% Others 19.9% 10.7% 20.4% Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

39 Gross Exports Decomposition, 2000 ASEAN % Total final demand 36.9% Final Demand 9.1% [1.4%] ASEAN % [6.0%] 9.6% [2.6%] Production 18.6% [4.6%] Production 40.2% Rest of the World 72.4% 22.0% Final Demand 32.2% Total final demand 63.1% G2 40.0% Others 23.1% 8.9% 18.3% Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

40 Value-Added Export Decomposition, 2011 ASEAN+3 100% Total final demand 36.0% Final Demand 8.3% [2.0%] 13.0% [5.2%] ASEAN % [9.7%] Production 20.0% [7.7%] Production 41.7% Rest of the World 71.7% 27.0% Final Demand 30.0% Total final demand 64.0% G2 32.4% Others 31.6% 7.0% 14.7% Value-added export decomposition = Domestic value-added + Returned domestic value + Foreign value-added Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies. 40

41 Value-Added Export Decomposition, 2005 ASEAN % Total final demand 36.2% Final Demand 8.8% [1.8%] ASEAN % [8.5%] 12.0% [4.2%] Production 20.1% [6.7%] Production 41.5% Rest of the World 71.1% 26.0% Final Demand 29.7% Total final demand 63.8% G2 41.2% Others 22.6% 8.1% 15.4% Value-added export decomposition = Domestic value-added + Returned domestic value + Foreign value-added Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.

42 Value-Added Export Decomposition, 2000 ASEAN % Total final demand 34.5% Final Demand 8.5% [1.4%] ASEAN % [5.8%] 11.6% [3.2%] Production 18.3% [4.4%] Production 40.9% Rest of the World 73.2% 26.5% Final Demand 32.3% Total final demand 65.5% G2 39.8% Others 25.7% 6.7% 14.4% Value-added export decomposition = Domestic value-added + Returned domestic value + Foreign value-added Source: Asia Regional Integration Center (ARIC) calculations using data from World Input-Output (IO) Tables and ADB Multiregional Input-Output tables (ADB-MRIO), and methodology from Z. Wang, S-J. Wei, and K. Zhu Quantifying International Production Sharing at the Bilateral and Sectoral Levels. NBER Working Paper No Cambridge, MA: NBER. Note: Except for Bangladesh, Malaysia, the Philippines, Thailand and Viet Nam IO tables, which were constructed by ADB, the rest were sourced from the World Input-Output Database (WIOD). While the WIOD and ADB IO tables have been constructed in a clear conceptual framework on the basis of officially published input-output tables in conjunction with national accounts and international trade statistics, level numbers are likely to remain different from those officially released by the respective economies.