Page 46 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

Chapter Eight
Do Export Statistics Reflect Technological Capability? The Case of ASEAN
Kee Cheok Cheong and Shiau Peng Chew

Introduction
It has been argued on theoretical grounds that developing countries advance economically as a
result of growing technological capability. In this process, not only will production embody
more value added but also more high-tech products will be exported. Korea and Taiwan, two
out of the four Asian “tigers” in the second wave of rapid development are examples of this
growth strategy. Zhu and Fu (2013) using a cross country panel data set posited a set of
determinants of export upgrading.

Some also associate globalization and trade liberalization with technology upgrading. Furata
(2015), studying Indian manufacturing firms, found exporters’ total factor productivity
increased when trade costs fell. However, more recently, countries further back in the
development chain have also seen their share of high-tech exports rise significantly.

In the relationship described above, the extent of technology upgrading and the technological
intensity of exports would be closely linked. But is this inevitable? There has been no story
of catch-up growth since the rise of Taiwan and Korea. Srholec (2005: 3), quoting Lall (2000),
therefore asks whether the positive data showing up in exports in countries like Malaysia is “a
statistics illusion”. Developing countries being incorporated into international production
chains is cited as a reason explaining this phenomenon.

This short chapter looks at domestic production and export link in the context of ASEAN,
where technological capability varies considerably from country to country. To the extent
where disconnect exists, it will attempt an explanation from the perspective of exports. In
doing so, it supplements research on domestic constraints to technological upgrading (e.g.
Intarakumnerd et al, 2015; Rasiah, 2010)

Technology Intensity of Exports
Table 8.1 shows the technology intensity of ASEAN country exports for the period 2010 –
2016. ASEAN member countries, while showing a wide range of high-tech export shares
(Singapore, the Philippines and Malaysia) have high export shares. Vietnam and Lao PDR
have also seen their shares of high-tech exports rise. Resource exporters Brunei, Indonesia,
and Myanmar have the lowest shares of high-tech exports.

For these countries, high-tech exports most likely consist of electronic components and
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electrical equipment (E&E). Countries like the Philippines, Malaysia and increasingly
Vietnam are participants of global supply chains in electronics which has also become a
mainstay of their manufacturing sector.

8 E&E exports include items exported under the following HS 2-digit classifications – 84, 85, 90, 91 and 92.
Scientific instruments have been included.
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