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Intertwined: FDI in Manufacturing and Trade in Services

Author

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  • Jonathan Gage
  • Molly Lesher

Abstract

This study analyses the complex relationship between manufacturing FDI and trade in services. An examination of how recent developments in the economic landscape have resulted in changes in the industrial organisation as well the structure of multinational enterprises is presented. This analysis serves as the foundation for a discussion of fragmentation—and the increased use of traded services in the fragmentation process—in four different manufacturing value chains (apparel, automobiles, semiconductors, and wood furniture). To complement the value chain assessments, the results of empirical work examining the relationship between the liberalisation of services and manufacturing FDI are included. Finally, the study outlines several policy implications that draw upon the analysis. In sum, this study highlights how the increasingly international nature of fragmentation, in part the result of services liberalisation, has redefined the way in which many manufacturing firms use services, interact with service suppliers, and make foreign direct investments.

Suggested Citation

  • Jonathan Gage & Molly Lesher, 2005. "Intertwined: FDI in Manufacturing and Trade in Services," OECD Trade Policy Papers 25, OECD Publishing.
  • Handle: RePEc:oec:traaab:25-en
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    File URL: http://dx.doi.org/10.1787/854442730526
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Francois, Joseph, 2015. "Modes of Supply for US Exports of Services," Papers 883, World Trade Institute.
    2. Christen, Elisabeth & Francois, Joseph, 2010. "Modes of Delivery in Services," CEPR Discussion Papers 7912, C.E.P.R. Discussion Papers.
    3. Singh, Nirvikar, 2006. "Services-led industrialization in India: Assessment and lessons," MPRA Paper 1276, University Library of Munich, Germany.
    4. Koopmann, Georg & Straubhaar, Thomas, 2008. "Zur Internationalisierung des Dienstleistungssektors," HWWI Research Papers 2-13, Hamburg Institute of International Economics (HWWI).

    More about this item

    Keywords

    FDI; fragmentation; investment; manufacturing; off-shoring; outsourcing; services; trade policy; value chain;

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