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 University of Oxford, Department of Economics in its series Economics Series Working Papers with number 544.
Date of creation: 01 Mar 2011
Date of revision:
Fragmentation; Off-shoring; Parts and components; Assembly; Vertical linkages; Agglomeration;
Other versions of this item:
- Baldwin, Richard & Venables, Anthony J., 2010. "Relocating the value chain: Off-shoring and agglomeration in the global economy," CEPR Discussion Papers 8163, C.E.P.R. Discussion Papers.
- 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, Spatial Production Analysis, and Firm Location
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-02 (All new papers)
- NEP-INT-2011-04-02 (International Trade)
- NEP-URE-2011-04-02 (Urban & Real Estate Economics)
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