Joining Pre-existing International Production Networks: Implications for India’s Economic Integration to East Asia

Jeongmeen Suh, Jong Duk Kim
JEL codes: 
KIEP Working Paper 13-02

This study provides a conceptual framework to explain what kinds of difficulties
a late-follower will suffer from when it tries to join pre-existing International
Production Networks (IPNs). We consider the total production cost minimization
problem by a multinational company (MNC) in allocating locations of fragmented
production processes across borders. From the clarification of IPNrelated
costs, we draw out what structural disadvantages late-follower countries
have and provide several policy implications to overcome these disadvantages
with more targeted efforts. Especially we put India’s case in the conceptual
framework of the IPNs and then look at the hurdles that make India’s participation
in the East Asian IPNs hard and sluggish. Relevant data are provided in order
to support the theoretical explanations.