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A Framework for Fragmentation

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  • Ronald W. Jones

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    (University of Rochester)

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    Abstract

    The word fragmentation refers to a splitting up of a verticallyintegrated production process such that the separatefragments can be traded on markets. This paper is concerned withinternational fragmentation, generally allowing gainsfrom a finer division of labor based on comparative advantage inseparate fragments. A discussion of how growth inoutput can encourage fragmentation because of the increasing returnsnature of the service links required to coordinateseparate production blocks, and how drastic reductions in the costsof these service links also encourages fragmentation isfollowed by a focus on internal income distribution. It is shownthat a country that loses a labor-intensive fragment of aprocess to international competition following a reduction in costsof service links may find its real wage rising. This isespecially possible in more capital-abundant countries.

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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-056/2.

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    Date of creation: 24 Jul 2000
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    Handle: RePEc:dgr:uvatin:20000056

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    1. Deardorff, A.V., 1998. "Fragmentation in Simple Trade Models," Papers, Michigan - Center for Research on Economic & Social Theory 98-11, Michigan - Center for Research on Economic & Social Theory.
    2. Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers, University of California, Davis, Department of Economics 986, University of California, Davis, Department of Economics.
    3. Gordon H. Hanson, 1994. "Localization Economies, Vertical Organization and Trade," NBER Working Papers 4744, National Bureau of Economic Research, Inc.
    4. Jones, R.W. & Marjit, S., 1992. "International Trade and Endogenous Production Structures," RCER Working Papers 312, University of Rochester - Center for Economic Research (RCER).
    5. Jones, Ronald W & Engerman, Stanley L, 1996. "Trade, Technology, and Wages: A Tale of Two Countries," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 35-40, May.
    6. Richard G. Harris, 1993. "Globalization, Trade, and Income," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 26(4), pages 755-76, November.
    7. Findlay, Ronald & Jones, Ronald, 2000. "Factor bias and technical progress," Economics Letters, Elsevier, Elsevier, vol. 68(3), pages 303-308, September.
    8. Sturgeon, Timothy J., 1997. "Turnkey Production Networks: A New American Model of Industrial Organization?," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley qt2095c9d0, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    9. Richard G. Harris, 1995. "Trade and Communication Costs," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 28(s1), pages 46-75, November.
    10. Zysman, John & Doherty, Eileen & Schwartz, Andrew, 1996. "Tales From the 'Global' Economy: Cross National Production Networks and the Re-organization of the European Economy," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley qt7h58x1r1, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    11. Arndt, Sven W., 1997. "Globalization and the open economy," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 8(1), pages 71-79.
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    Cited by:
    1. Richard Baldwin & Frédéric Robert-Nicoud, 2010. "Trade-in-goods and trade-in-tasks: An Integrating Framework," NBER Working Papers 15882, National Bureau of Economic Research, Inc.
    2. Alessia Amighini & Roberta Rabellotti, 2003. "the effects of globalization on italian industrial districts: evidence from the footwear sector," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 64, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    3. Roberta Rabellotti & Alessia Amighini, 2003. "The effect of globalisation on industrial districts in Italy: evidence from the footwear sector," ERSA conference papers ersa03p500, European Regional Science Association.
    4. Baldwin, Richard & Robert-Nicoud, Frédéric, 2007. "Offshoring: General Equilibrium Effects on Wages, Production and Trade," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6218, C.E.P.R. Discussion Papers.
    5. Ilaria Mariotti & Giacinto Micucci & Pasqualino Montanaro, 2004. "Internationalisation strategies of Italian district SMEs: an analysis on firm-level data," ERSA conference papers ersa04p436, European Regional Science Association.

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