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A Framework for Fragmentation

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  • Ronald W. Jones

    (University of Rochester)

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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  • Ronald W. Jones, 2000. "A Framework for Fragmentation," Tinbergen Institute Discussion Papers 00-056/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000056
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    Cited by:

    1. Kemal Türkcan, 2009. "Vertical Intra-Industry Trade: An Empirical Examination of the Austria’s Auto-Parts Industry," FIW Working Paper series 030, FIW.
    2. Joël Hellier, 2013. "The North-South HOS Model, Inequality and Globalization," Palgrave Macmillan Books, in: Joël Hellier & Nathalie Chusseau (ed.), Growing Income Inequalities, chapter 4, pages 107-146, Palgrave Macmillan.
    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. Zoltan Gal, 2013. "New Bangalores - The role of Central and Eastern Europe in business and IT services offshoring," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 2(3), pages 77-100, September.
    5. Hazel Parcon, 2008. "Disaggregating PTAs at the Role of International Division of Labor on PTA Formation," Working Papers 200806, University of Hawaii at Manoa, Department of Economics.
    6. Elzbieta Czarny & Guenter Lang, 2002. "Accession Poland's to the EU - Some Lessons from International Trade Theory," Discussion Paper Series 216, Universitaet Augsburg, Institute for Economics.
    7. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    8. Baldwin, Richard & Robert-Nicoud, Frédéric, 2007. "Offshoring: General Equilibrium Effects on Wages, Production and Trade," CEPR Discussion Papers 6218, C.E.P.R. Discussion Papers.
    9. Jörn Kleinert, 2003. "Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing, or Increasing Importance of MNE Networks?," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 464-482, August.
    10. Meyer, Thomas, 2007. "India's specialisation in IT exports: Offshoring can't defy gravity," MPRA Paper 5780, University Library of Munich, Germany.
    11. Bernardina Algieri & Antonio Aquino & Marianna Succurro, 2022. "Trade Specialisation and Changing Patterns of Comparative Advantages in Manufactured Goods," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 607-667, November.
    12. Alexander Hijzen & Mauro Pisu & Richard Upward & Peter W. Wright, 2011. "Employment, job turnover, and trade in producer services: UK firm-level evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 1020-1043, August.
    13. Gustavo S. Cortes & Renato L. Marcondes & Maria Dolores M. Diaz, 2009. "A Importância da Organização Interna da Firma para o Processo de Fragmeção Espacial da Produção: uma Simulação," Working Papers 12-2011, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
    14. Dieter Ernst, 2002. "Global Production Networks in East Asia's Electronics Industry and Upgrading Perspectives in Malaysia," Economics Study Area Working Papers wp44, East-West Center, Economics Study Area, revised Oct 2003.
    15. Prema-chandra Athukorala & Archanun Kophaiboon, 2013. "Trade and Investment Patterns in Asia: Implications for Multilateralizing Regionalism," Departmental Working Papers 2013-16, The Australian National University, Arndt-Corden Department of Economics.
    16. Peter Warda, 2014. "Labor Demand: The Role of Imports in Production," The International Trade Journal, Taylor & Francis Journals, vol. 28(4), pages 363-386, October.
    17. Russell Thomson & Prema-Chandra Athukorala, 2020. "Global production networks and the evolution of industrial capabilities: does production sharing warp the product space?," Oxford Economic Papers, Oxford University Press, vol. 72(3), pages 731-747.
    18. Alessia Amighini & Roberta Rabellotti, 2003. "the effects of globalization on italian industrial districts: evidence from the footwear sector," Working Papers 64, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    19. Shahbaz Nasir & Kaliappa Kalirajan, 2013. "Export Performance of South and East Asia in Modern Services," ASARC Working Papers 2013-07, The Australian National University, Australia South Asia Research Centre.
    20. 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.
    21. Baldwin, Richard, 2009. "Integration of the North American economy and new-paradigm globalisation," CEPR Discussion Papers 7523, C.E.P.R. Discussion Papers.
    22. Nuno Leitão & Horácio Faustino & Yushi Yoshida, 2009. "Determinants of Vertical Intra-Industry Trade in the Automobile Manufacturing Sector: globalization and fragmentation," Working Papers Department of Economics 2009/06, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    23. Nobuaki Yamashita & Kiichiro Fukasaku, 2021. "Is the COVID-19 Pandemic Recasting Global Value Chains in East Asia?," Working Papers DP-2021-19, Economic Research Institute for ASEAN and East Asia (ERIA).
    24. Yang, Yiwen & Lin, Chinho, 2021. "Impact of the “Belt and Road Initiative” on machinery production networks," Economic Modelling, Elsevier, vol. 104(C).
    25. Sonja Grater, 2014. "Comparative Advantage of Value-Added Services: The Case of South Africa," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(3 (Fall)), pages 279-295.

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