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How far do we trade intermediate inputs?

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Author Info
Anna Maria Pinna ()
C. Fancello

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Abstract

We look at determinants of intermediates inputs imports focusing on the role of distance as a direct measure of the costs involved in spreading a production process across different economies. We consider imports to two countries: Italy, whose competitive advantage is still hinged in the traditional sectors, and Germany, strongly specialized in skilled and capital intensive activities; in two sectors, footwear and PCs; in two periods end of the 80s and end of the 90s. Delocalization of stages of that part of the production which serves the domestic market to a foreign country is a costly activity at least because of the transport costs from re-importing goods home. The evidence of falling off imports with distance captures exactly how transport costs can offset other cost advantages from the use of cheaper resources. Our results would suggest this is not the case in all sectors, at least not in the production of computers and their parts. Imports of intermediates inputs for electronic components are not a clear indication of activities outsourced, delocalized with the aim of reducing costs. Other characteristics of trade patterns and of their production technology will have to investigated in order to understand the map of their production and their movements across borders, i.e. the determinants of the fragmentation of their production process.

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Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 200207.

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Date of creation: 2002
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Handle: RePEc:cns:cnscwp:200207

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Related research
Keywords: outsourcing; intermediate inputs; distance and trade flows;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Grossman, G.M. & Helpman, E., 2002. "Outsourcing in a Global Economy," Papers 218, Princeton, Woodrow Wilson School - Public and International Affairs.
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  2. Overman, Henry G. & Redding, Stephen J & Venables, Anthony J., 2001. "The Economic Geography of Trade Production and Income: A Survey of Empirics," CEPR Discussion Papers 2978, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 2001. "Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 137(1), pages 80-104, March. [Downloadable!] (restricted)
  4. Michael Freudenberg & Francoise Lemoine, 1999. "Central And Eastern European Countries In The International Division Of Labour In Europe," Working Papers 1999-05, CEPII research center. [Downloadable!]
  5. James E. Rauch & Vitor Trindade, 1999. "Ethnic Chinese Networks in International Trade," NBER Working Papers 7189, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
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Cited by:
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  1. Gerardo Marletto, 2006. "La politica dei trasporti come politica per l’innovazione: spunti da un approccio evolutivo," Working Paper CRENoS 200605, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  2. OA. Carboni & G. Medda, 2007. "Government Size and the Composition of Public Spending in a Neoclassical Growth Model," Working Paper CRENoS 200701, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
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