On the Determinant of Trading Hub in East and Southeast Asia: Theory and Empirical Evidence

Based on the existing hubness measure in the trade literature, we develop two modified trading hub indexes in two directions, export destination, and import source. Then we demonstrate the stylized fact of China and Japan’s double trading hub,especially in an export destination sense, in East Asia since the early 1990s. After showing the dynamics of the twin hub, more specifically the rising China hub and shrinking Japan hub, theoretical explanations, such as the home-market effect (HME), FDI and technological advantage, transport hub and assembly hub under a global supply chain (GSC) are asserted. Finally, panel data from 1993 to 2014 of thirteen economies, including eleven economies in East Asia, the USA, and EU as a whole, are established to conduct empirical tests. In general, except the transport hub, the empirical evidence supports most of the theoretical arguments, including the role of HME, assembly hub and technological advantage for making a trading hub, in terms of export destination and/or import sources. However, there still remains a country-specific effect in the fostering of the trading hub, especially China, USA, and EU.補正完