Is East Asia's Economic Fate Chained to the West?

This paper analyzes to what extent East Asia's integration into global value chains (GVCs) has made the region more vulnerable to business cycle shocks in the West. We identify different channels through which business cycle shocks in the West can propagate to East Asian countries via global value chains. We next demonstrate that standard measures of external dependence are biased since they do not adequately capture the effects of these various GVC channels. Finally, we apply our framework to gain new insights into the role of GVCs in triggering East Asia's trade collapse during the Global Recession of 2008-2009.