Gains from Fragmentation at the Firm Level: Evidence from Japanese Multinationals in East Asia
AbstractThe unprecedented development of production networks in East Asia has been investigated, both theoretically and empirically, employing the conceptual framework of fragmentation theory and its extensions. However, the benefits of production fragmentation at the firm level, particularly benefits deriving from different location advantages, have never been directly measured empirically. This paper presents the very first attempt, to the authorsf knowledge, to empirically capture the benefits of fragmentation. Specifically, using Japanese firm-level data, we find that the larger the gap in the capital-labor ratios between fragmenting firmsf home and overseas activities, the more greatly their cost efficiency improves.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-094.
Date of creation: Dec 2009
Date of revision:
Firm heterogeneity; multinational enterprises; fragmentation; factor intensity; micro data;
Other versions of this item:
- Kazunobu HAYAKAWA & Fukunari KIMURA & Toshiyuki MATSUURA, 2009. "Gains from Fragmentation at the Firm Level: Evidence from Japanese Multinationals in East Asia," Working Papers d010, Economic Research Institute for ASEAN and East Asia (ERIA).
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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- Fukunari Kimura, 2009. "The Nature and Characteristics of Production Networks in East Asia: Evidences from Micro/Panel Data Analyses," Global COE Hi-Stat Discussion Paper Series gd09-093, Institute of Economic Research, Hitotsubashi University.
- Fukunari Kimura & Ayako Obashi, 2011.
"Production Networks in East Asia : What We Know So Far,"
Trade Working Papers
23216, East Asian Bureau of Economic Research.
- Kimura, Fukunari & Obashi, Ayako, 2011. "Production Networks in East Asia: What We Know So Far," ADBI Working Papers 320, Asian Development Bank Institute.
- Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Microeconomics Working Papers 23216, East Asian Bureau of Economic Research.
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