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Globalization and Country-Specific Service Links




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 crosssection analysis of manufactured exports and of FDI in manufacturing confirms the importance of service link infrastructure.

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  • Stephen S. Golub, Ronald W. Jones, Henryk Kierzkowski, 2007. "Globalization and Country-Specific Service Links," IHEID Working Papers 05-2007, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heiwp05-2007

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    References listed on IDEAS

    1. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2007. "The Political Economy of European Merger Control: Evidence using Stock Market Data," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 455-489.
    2. Beath,John & Katsoulacos,Yannis, 1991. "The Economic Theory of Product Differentiation," Cambridge Books, Cambridge University Press, number 9780521335263, May.
    3. Damien Neven, 2002. "Discrepancies Between Markets and Regulators: an Analysis of the First ten Years of EU Merger Control," IHEID Working Papers 10-2002, Economics Section, The Graduate Institute of International Studies.
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    Cited by:

    1. Peter Debaere & Holger Görg & Horst Raff, 2013. "Greasing the wheels of international commerce: how services facilitate firms' international sourcing," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 78-102, February.
    2. 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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