Organising regional production networks in Southeast Asia: implications for production fragmentation, trade, and rules of origin

The globalisation of economic activities has fundamentally reshapedthe relationships between production and trade. The cross-borderproduction activities of transnational corporations (TNCs) havenot only deepened spatial divisions of labour, but also complicatedour understanding of international trade patterns. The developmentof intricate regional production networks by global corporationshas major implications for production fragmentation, internationaltrade, and rules of origin in the global economy. Empiricallygrounded in a study of regional production networks controlledby Singapore-based TNCs, this paper aims to make a modest contributionto the emerging literature on production fragmentation and rulesof origin. Based on an analysis of empirical data from a surveyof 63 parent Singapore-based manufacturing TNCs that have cross-borderoperations in Southeast Asia, I found that their spatial productionfragmentation is rather limited. Most of their Southeast Asiansubsidiaries cater to local markets, or manufacture components/partsfor the regional production facilities of their major globalcorporation customers. I also consider the implications forbusiness strategies and public policies in relation to productionfragmentation and rules of origin in Southeast Asia.