Abstract:
International production networks have become an increasingly important part of
international production and trade in recent times, especially in East Asia. An
international production network refers to inter- and intra-firm relationships through
which a lead firm organizes the entire range of its business activities, from research
and development (R&D), product definition and design, to supply of inputs,
manufacturing (or production of a service), distribution, and support services. The
objective of this paper is to identify the current status of the integration of Sri Lankan
firms into the international production networks and to explore the potential to
strengthen this integration further. This study draws on data on trade in parts and
components from Sri Lanka’s trade statistics from the United Nations trade data
reporting system for the period of 2000 to 2016. Additional data and information on
export trade and industrial exports are drawn from the Export Development Board,
Department of Commerce, Sri Lanka Customs, and the Central Bank of Sri Lanka.
Export product categories and the share of parts and components are reviewed in
terms of their export destination, and the main firms exporting them are identified and
classified. A time series analysis was performed on the product categories and the
industrial links of exporting firms in order to identify the expansion of Sri Lankan
exports to international production networks. The analysis of data reveals that a
number of Sri Lankan firms, especially from the apparel and services industry, have
already been able to make links with international production networks. Products such
as apparel, ICT, and Business Process Management activities have been linked with
international production networks, and there exists greater potential for expansion of
this trend to other activities as well.
