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Proximity and Production Fragmentation

Author

Listed:
  • Robert C. Johnson
  • Guillermo Noguera

Abstract

Cross-border production chains tend to include geographically proximate countries. This suggests that increases in fragmentation should be largest among nearby trading partners, and thus may serve to localize gross trade. Using data on gross and value added trade from 1970-2009, we present three results supporting this conjecture. First, value added to export ratios are lower and falling more rapidly within geographic regions than between them. Second, gross trade travels shorter distances from source to destination than value added trade, and this gap is growing over time. Third, bilateral value added to export ratios have fallen most among nearby trading partners.

Suggested Citation

  • Robert C. Johnson & Guillermo Noguera, 2012. "Proximity and Production Fragmentation," American Economic Review, American Economic Association, vol. 102(3), pages 407-411, May.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:407-11
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    Citations

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    Cited by:

    1. Kaltenegger, Oliver & Löschel, Andreas & Pothen, Frank, 2017. "The Effect of Globalisation on Energy Footprints: Disentangling the Links of Global Value Chains," Hannover Economic Papers (HEP) dp-587, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. repec:taf:ecsysr:v:29:y:2017:i:1:p:66-81 is not listed on IDEAS
    3. Richard Pomfret & Patricia Sourdin, 2016. "Trade between Australia and the EU, 1990 - 2015," School of Economics Working Papers 2016-10, University of Adelaide, School of Economics.
    4. Sandrine NOBLET & Antoine BELGODERE, 2016. "Complexity Of Production Processes And The Need For Proximity," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 5-19.
    5. repec:bla:ausecr:v:50:y:2017:i:2:p:181-194 is not listed on IDEAS
    6. Osnago,Alberto & Rocha,Nadia & Ruta,Michele, 2015. "Deep trade agreements and vertical FDI : the devil is in the details," Policy Research Working Paper Series 7464, The World Bank.
    7. Patrick Alexander, 2016. "Producer Heterogeneity, Value-Added, and International Trade," Staff Working Papers 16-54, Bank of Canada.
    8. Magdalena Olczyk & Aleksandra Kordalska, 2017. "Gross Exports Versus Value-Added Exports: Determinants and Policy Implications for Manufacturing Sectors in Selected CEE Countries," Eastern European Economics, Taylor & Francis Journals, vol. 55(1), pages 91-109, January.
    9. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    10. repec:bla:presci:v:96:y:2017:i:1:p:61-92 is not listed on IDEAS
    11. Marlies Schütz & Nicole Palan, 2015. "Restructuring the International Textile Production and Trade Network. The Role of Italy and Portugal," FIW Working Paper series 156, FIW.
    12. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    13. Arjan Lejour & Hugo Rojas-Romagosa & Paul Veenendaal, 2017. "Identifying hubs and spokes in global supply chains using redirected trade in value added," Economic Systems Research, Taylor & Francis Journals, vol. 29(1), pages 66-81, January.
    14. Steven Brakman & Charles Van Marrewijk, 2017. "A closer look at revealed comparative advantage: Gross-versus value-added trade flows," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 61-92, March.
    15. Duval, Romain & Li, Nan & Saraf, Richa & Seneviratne, Dulani, 2016. "Value-added trade and business cycle synchronization," Journal of International Economics, Elsevier, vol. 99(C), pages 251-262.
    16. repec:bla:chinae:v:25:y:2017:i:3:p:1-30 is not listed on IDEAS
    17. Lionel Fontagné & Gianluca Santoni, 2017. "Value Added in Motion: Determinants of Value Added Location within the EU," Development Working Papers 424, Centro Studi Luca d'Agliano, University of Milano, revised 24 Feb 2017.
    18. Zaclicever, Dayna, 2017. "Trade integration and production sharing: A characterization of Latin American and Caribbean countries’ participation in regional and global value chains," Comercio Internacional 137, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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