Product sophistication: A tie that binds partners in international production sharing

This paper focuses on the role of product sophistication in determining the permanence in international production networks. The probability of remaining in the global production chains in a changing and unstable competitive environment is expected to be higher for suppliers that provide the most sophisticated goods, i.e. goods that incorporate the most advanced economies’ capabilities. In order to check this hypothesis we use discrete time duration model. Our estimates indicate that, indeed, the risk of being removed from production networks decreases not only with the complexity of the products, but also with the reduction of uncertainty in production and trade relationships and with the degree of integration in these international-scale networks.