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Is there a trend towards global value chain specialization? -- An examination of cross border sales of US foreign affiliates

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  • Beugelsdijk, Sjoerd
  • Pedersen, Torben
  • Petersen, Bent

Abstract

In this study we discuss and empirically test the assertion that over the last two decades multinational enterprises' (MNEs') configuration of value-adding activities has shifted from a sparse and simple (host-home) international division of labor among the foreign affiliates to a more specialized and 'advanced' global value chain configuration in which MNEs locate fine-sliced parts of the value chain at the most efficient locations. Using data on trade flows of U.S. affiliates in 56 host countries between 1983 and 2003 we find some indications of a trend in the direction of global value chain specialization. In particular among US affiliates in developing countries the proportion of host-host, intra-firm trade has increased significantly during the observed period of time. Conversely, the proportion of host-home and inter-firm trade has diminished. We interpret this as indicating both value chain disaggregation (vertical specialization) and MNEs' systematic exploitation of factor cost differentials across countries. We also find that the absolute levels of all types of trade flows have increased. Hence, it is the relative, and not the absolute, changes in the trade flow patterns of US affiliates that gives credibility to the global value chain assertion.

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  • Beugelsdijk, Sjoerd & Pedersen, Torben & Petersen, Bent, 2009. "Is there a trend towards global value chain specialization? -- An examination of cross border sales of US foreign affiliates," Journal of International Management, Elsevier, vol. 15(2), pages 126-141, June.
  • Handle: RePEc:eee:intman:v:15:y:2009:i:2:p:126-141
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    References listed on IDEAS

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    Cited by:

    1. Erik Figueiredo & Luiz Renato Lima & Gianluca Orefice, 2016. "Migration and Regional Trade Agreements: A (New) Gravity Estimation," Review of International Economics, Wiley Blackwell, pages 99-125.
    2. Kothari, Tanvi & Lahiri, Somnath, 2012. "Yesterday, today and tomorrow: An overview of research publications in the Journal of International Management," Journal of International Management, Elsevier, pages 102-110.
    3. Julien Gooris & Carine Peeters, 2012. "Home-Host Country Distance and Governance Choices in Service Offshoring," Working Papers ECARES ECARES 2012-007, ULB -- Universite Libre de Bruxelles.
    4. Mauri, Alfredo J. & Neiva de Figueiredo, João, 2012. "Strategic Patterns of Internationalization and Performance Variability: Effects of US-Based MNC Cross-Border Dispersion, Integration, and Outsourcing," Journal of International Management, Elsevier, pages 38-51.
    5. Lema, Rasmus & Quadros, Ruy & Schmitz, Hubert, 2012. "Shifts in Innovation Power to Brazil and India: Insights from the Auto and Software Industries," MPRA Paper 49591, University Library of Munich, Germany.
    6. Maria Chiarvesio & Eleonora Maria & Stefano Micelli, 2013. "Sourcing from Northern and Southern Countries: The Global Value Chain Approach Applied to Italian SMEs," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), pages 389-404.
    7. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 1444-1459.
    8. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 1444-1459.
    9. Gooris, Julien & Peeters, Carine, 2014. "Home–Host Country Distance in Offshore Governance Choices," Journal of International Management, Elsevier, pages 73-86.
    10. Julien Gooris & Carine Peeters, 2013. "Home-Host Country Distance in Offshore Governance Choices," Working Papers ECARES ECARES 2013-13, ULB -- Universite Libre de Bruxelles.
    11. Jensen, Peter D. Ørberg, 2012. "A passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services," Journal of World Business, Elsevier, pages 311-326.
    12. Nguyen, Quyen T.K. & Rugman, Alan M., 2015. "Multinational subsidiary sales and performance in South East Asia," International Business Review, Elsevier, pages 115-123.
    13. Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, pages 390-406.

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