iMFdirect – The IMF Blog

By Anoop Singh

Much of the debate over global rebalancing has focused on the U.S.-China trade imbalance. But that’s missing the bigger picture.

With the growth of cross-border supply chains—a signature feature of Asia’s trade in recent decades—it would be misleading to focus on bilateral imbalances and exchange rates.

Instead of specializing in producing certain types of final goods, Asian exporters increasingly have specialized in certain stages of production and become vertically integrated with each other. So, as Asia’s economies strive to rebalance their growth models, we need to understand better how the regional supply chain affects the way exchange rates and shifts in global demand work. (more…)

Filed under: Asia, Economic outlook, International Monetary Fund | Tagged: Asian integration, capital goods, competitiveness, cross-border supply chains, economic imbalances, effective exchange rate, exchange rates, global rebalancing, intermediate good imports, intermediate inputs, production disruptions, Regional Economic Outlook: Asia and Pacific, regional integration, trade integration, trade partners, vertical integration | 1 Comment »