Global Value Chain Analysis of Indonesia, China and Vietnam Electronic Industry

Abstract

China and Vietnam are the two largest and fastest growing countries in the electronics industry's exports in the past decade, above Indonesia. However, the value of exports is no longer the true benefit received by a country considering there are value added of other countries within the export. The global value chain can overcome this situation. Using the inter-country input output (ICIO) approach in 1995 and 2011, this study aims to find out; (i) decomposition of the global value chain of exports of the Indonesian, Vietnamese and Chinese electronic industries; (ii) developments in the position and participation of export of the Indonesian, Vietnamese and Chinese electronic industries in the global value chain. The results show that the global value chain of Indonesia's electronic industry exports is still dominated by domestic value added rather than foreign value added, and generally in term of intermediate products, and also  participation in the global value chain decreases and its position remains in a "downstream" position. China reduced its domestic value added by increasing its foreign value added, especially on intermediate products, with the participation of the global value chain increasing and its position increasingly "downstream". While Vietnam, it is still dominated by foreign value added and generally in the term of intermediate products and its participation in the global value chain is getting bigger and its position is increasingly "downstream". Therefore, participation in the global value chain of the Indonesian electronic industry must be increased with the increasing role of foreign parties. One of the effort is product development between international marketing networks.