Relocating the value chain: Off-shoring and agglomeration in the global economy
AbstractFragmentation of stages of the production process is determined by international cost differences and by the benefits of co-location of related stages. The interaction between these forces depends on the technological relationships between these stages. This paper looks at both cost minimising and equilibrium fragmentation under different technological configurations. Reductions in trade costs beyond a threshold can result in discontinuous changes in location, with relocation of a wide range of production stages. There can be overshooting (off-shoring that is reversed as costs fall further) and equilibrium may involve less off-shoring than is efficient.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8163.
Date of creation: Dec 2010
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Other versions of this item:
- Tony Venables & Richard Baldwin, 2011. "Relocating the value chain: off-shoring and agglomeration in the global economy," Economics Series Working Papers 544, University of Oxford, Department of Economics.
- F1 - International Economics - - Trade
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location
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