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Globalization and Country-Specific Service Links

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Author Info

  • Stephen S. Golub

    (Swarthmore College)

  • Ronald W. Jones

    ()
    (University of Rochester)

  • Henryk Kierzkowski

    (Graduate Institute of International Studies, Geneva)

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    Abstract

    The Jones-Kierzkowski model of global fragmentation of production draws attention to the cost and efficiency of “service links” connecting “production blocks” in different countries. Country-specific service links include transport and telecommunications infrastructure and the overall business climate. Mobile factors of production, most prominently foreign direct investment (FDI), can shop around for countries with the most functional and inexpensive service links along with low labor costs. Those countries with favorable business climates and well-functioning service links are able to attract FDI and other mobile inputs, and participate in international production networks. We provide evidence that successful exporters of manufactures, notably in East Asia, have relatively favorable service links. A cross-section analysis of manufactured exports and of FDI in manufacturing confirms the importance of service link infrastructure.

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    File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_532.pdf
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    Bibliographic Info

    Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 532.

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    Length: 33 pages
    Date of creation: Jan 2007
    Date of revision:
    Handle: RePEc:roc:rocher:532

    Contact details of provider:
    Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

    Related research

    Keywords: Conflicting claims; Division rules; Operators; Minimal rights; Maximal claims; Duality; Convexity.;

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    Cited by:
    1. Peter Debaere & Holger Görg & Horst Raff, 2010. "Greasing the Wheels of International Commerce: How Services Facilitate Firms' International Sourcing," Kiel Working Papers 1591, Kiel Institute for the World Economy.
    2. Jones, Ronald W., 2010. "Art works in international trade theory," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 64-74, January.
    3. Henryk Kierzkowski & Lurong Chen, 2007. "Outsourcing and Trade Imbalances: The U.S: - China Case," DEGIT Conference Papers c012_003, DEGIT, Dynamics, Economic Growth, and International Trade.

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