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Global Production Networks and Regional Integration


  • Sven W. Arndt

    () (Lowe Institute of Political Economy, Claremont McKenna College)


This paper examines the implications of cross-border production fragmentation in the context of regional integration, using both general- and partial-equilibrium approaches. It shows the conditions under which fragmentation converts a trade-diverting FTA into a trade creating one. It assesses the effect of fragmentation on the balance of payments and the sensitivity of trade flows to exchange-rate changes.

Suggested Citation

  • Sven W. Arndt, 2003. "Global Production Networks and Regional Integration," Working Papers 0301, Lowe Institute of Political Economy.
  • Handle: RePEc:loi:wpaper:0301

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    fragmentation; exchange-rate elasticities;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F31 - International Economics - - International Finance - - - Foreign Exchange


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