Abstract:

The fragmentation of production processes on a regional scale, also referred to as the creation of the international production network, is an interesting phenomenon taking place  in contemporary global economy. Commercial liberalisation and accompanying direct international investments have seen transnational corporations  begin to divide the production process between locations in various countries of East Asia, using the comparative advantages, resources and technical possibilities available on local markets. A few countries in the region simultaneously participate in various stages of the production of a given final product. Undoubtedly the break-down of the value creation chain significantly deepens the integration processes taking place among the countries participating in production. On the one hand countries are forced to compete with one another in order to attract direct foreign investment and on the other hand the market enforces the removal of barriers hindering the functioning of the international production chain. Asian regionalism thus  leads the networks of economies to function together as a ‘global factory’ (Munakata, 2004).