What does evidence tell us about fragmentation and outsourcing ?

International production networks have emerged in a manifold of industries and products: sports footwear, mobile phones, cars, clothing, computers, and furniture to name only a few. While there obviously are agglomeration forces operating in some areas, dispersion of economic activities is also a fact of life. One of the consequences of disagglomeration manifests itself in a rapid expansion of international trade in parts and components. We look at the empirical evidence demonstrating trends regarding disagglomeration of production on a regional or global basis. We also test two hypotheses stemming from our joint work on fragmentation of production: - Growth of the world economy increases the degree of fragmentation. - As services become cheaper and more readily available, international trade in parts and components expands.

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In: International review of economics and finance : IREF. - Stamford, Conn. - Vol. 14 (2005), Issue 3, p. 305-316
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