Publisher Description

"Fragmentation" is a term used in this volume to describe cross-border component specialization and production-sharing. Examination of recent trade data suggests that offshore sourcing of parts and components, as well as offshore assembly, are assuming an increasing role in the world economy. The theoretical implications of this type of specialization are examined in several chapters with the aid of both Ricardian and Heckscher-Ohlin trade models. Production isfirst decomposed ("fragmented") into its constituent parts and activities, and then it is at this level that factor-intensities and technologies are calibrated. The implications of intra-productspecialization and component trade are investigated under conditions of free, restricted, and preferential trade. The role of multinationals is explored and the importance of cross-border service-links among component activities is , extension of the principle of comparative advantage beyond products to the realm of parts and components is welfare-enhancing. Industries take advantage of offshore sourcing in order to reduce costs and increasecompetitiveness. Component specialization offers new and additional opportunities for the exploitation of scale economies. Across a broad range of conditions, it raises output and employment. Its effects on wagesare spelled out. Trade between advanced, high-wage and developing low-wage countries is an obvious candidate for the two-way application of component specialization. The empirical part of the volume presents an evaluation of new data which allow the separation of trade in components and in final products. It also provides assessments of the role of component specialization in the trade of several countries and addition to their relevance for trade theoristsand country specialists, the studies collected in this volume have interesting implications for the conduct of trade policy. They contradict claims that trade with low-wage countries must bewelfare-reducing and they suggest new approaches to industrialization and economic development.

Table of Contents

1: Sven W. Arndt and Henryk Kierzkowski: Introduction2: Ronald W. Jones and Henryk Kierzkowski: A Framework for Fragmentation3: Alan V. Deardorff: Fragmentation Across Cones4: Richard G. Harris: A Communication Based Model of Global Production Fragmentation5: Swen W. Arndt: Offshore Sourcing and Intra-Product Specialization in Preference Areas6: Victoria Curzon Price: Some Causes and Consequences of Fragmentation7: Alexander J. Yeats: Just How Big is Global Production Sharing?8: Frances Ruane and Holger Görg: Globalization and Fragmentation: Evidence for the Electronics Industry in Ireland9: Leonard K. Cheng, Larry D. Qiu, and Guofu Tan: Foreign Direct Investment and International Fragmentation in Production10: Alberto Petrucci and Beniamino Quintieri: Will Italy Survive Globalization?11: Giovanni Graziani: International Subcontracting in the Textile and Clothing Industry12: Henryk Kierzkowski: Joining the Global Economy: Experience and Prospects of the Transition Economies

Review

In general, the contributions to this book give a comprehensive overview on the state of research on fragmentation, both theoretical and empirical, and can in certain respects be seen as seminal and pioneering studies. The Weltwirtschaftliches Archiv: Review of World Economics Edited by two authors who made early and very important contributions to the theoretical framework for the analysis of fragmentation ... the book can be seen as a well-balanced mix of theoretical and empirical studies, all of which make contributions based on the most important and most recent literature about fragmentation. The Weltwirtschaftliches Archiv: Review of World Economics

Long Description

"Fragmentation" is a term used in this volume to describe cross-border component specialization and production-sharing. Examination of recent trade data suggests that offshore sourcing of parts and components, as well as offshore assembly, are assuming an increasing role in the world economy. The theoretical implications of this type of specialization are examined in several chapters with the aid of both Ricardian and Heckscher-Ohlin trade models. Production is
first decomposed ("fragmented") into its constituent parts and activities, and then it is at this level that factor-intensities and technologies are calibrated. The implications of intra-product specialization and component trade are investigated under conditions of free, restricted, and preferential
trade. The role of multinationals is explored and the importance of cross-border service-links among component activities is , extension of the principle of comparative advantage beyond products to the realm of parts and components is welfare-enhancing. Industries take advantage of offshore sourcing in order to reduce costs and increase competitiveness. Component specialization offers new and additional opportunities for the exploitation of scale
economies. Across a broad range of conditions, it raises output and employment. Its effects on wages are spelled out. Trade between advanced, high-wage and developing low-wage countries is an obvious candidate for the two-way application of component specialization. The empirical part of the volume
presents an evaluation of new data which allow the separation of trade in components and in final products. It also provides assessments of the role of component specialization in the trade of several countries and addition to their relevance for trade theorists and country specialists, the studies collected in this volume have interesting implications for the conduct of trade policy. They contradict claims that trade with low-wage countries must be
welfare-reducing and they suggest new approaches to industrialization and economic development.

Review Text

1. Sven W. Arndt and Henryk Kierzkowski: Introduction 2. Ronald W. Jones and Henryk Kierzkowski: A Framework for Fragmentation 3. Alan V. Deardorff: Fragmentation Across Cones 4. Richard G. Harris: A Communication Based Model of Global Production Fragmentation 5. Swen W. Arndt: Offshore Sourcing and Intra-Product Specialization in Preference Areas 6. Victoria Curzon Price: Some Causes and Consequences of Fragmentation 7. Alexander J. Yeats: Just How Big is Global Production Sharing? 8. Frances Ruane and Holger Gorg: Globalization and Fragmentation: Evidence for the Electronics Industry in Ireland 9. Leonard K. Cheng, Larry D. Qiu, and Guofu Tan: Foreign Direct Investment and International Fragmentation in Production 10. Alberto Petrucci and Beniamino Quintieri: Will Italy Survive Globalization? 11. Giovanni Graziani: International Subcontracting in the Textile and Clothing Industry 12. Henryk Kierzkowski: Joining the Global Economy: Experience and Prospects of the Transition Economies

Review Quote

"The papers in this collection explore the theoretical implications and empirical manifestations of cross-borde dispersion of component production."--Book notes

Feature

Develops an analytical framework and brings together new data for evaluating the implications of an important aspect of globalization.
Presents a series of country studies on the effects of trade and globalization.
Provides policy assessments and guidelines for the conduct of trade policy.

Details