Determinants of Export Performance in East and Southeast Asia

Abstract

This paper examines the determinants of exports in eight East and Southeast Asian economies, with an emphasis on the increasing importance of parts and components in total exports. To see whether exports in parts and components are ‘special’ and to allow comparisons, export equations are estimated for three different export categories: total merchandise exports, manufacturing exports and exports of machinery and transport equipment (SITC 7). The analysis is based on data for 1993–2008, a period over which parts and components trade burgeoned. The estimations indicate that the growing importance in the export composition of parts and components within vertically integrated cross-border production processes has tended to weaken the nexus of real exchange rate and export performance. World demand and supply-side factors, including foreign direct investment, tend to become more crucial in determining export performance.