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Production sharing in Latin American trade: a research note

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  • Ventura Dias, Vivianne
  • Durán Lima, José Elías

Abstract

The recent literature on industry globalisation and global production sharing has called attention to the changing nature of world trade with the predominance of trade in manufactures, the fragmentation of the production process and contractual relations between firms. Even when those changes do not question the most fundamental notion of trade and production specialisation according to factor services endowments, the literature points to a specialisation within a narrow set of activities and likely to be more fragmented. Enterprises may select labour intensive activities from a number of predominantly labour as well as from capital intensive industries initially located in industrial countries to relocate them in developing countries. Nevertheless, those activities can be reconverted to industrial countries if and when technological change makes their consolidation more profitable. Mexico has a history of integrating its economy with that of the United States and of full adoption of production sharing as a strategy of integrating its economy into the world economy. On the other extreme, Brazil has been oriented towards its domestic market and more recently towards the regional market. Even though imported inputs have increased after trade liberalisation, proportion to domestically produced inputs is still moderate. The contrasting experience of the two countries is an open field for research.

Suggested Citation

  • Ventura Dias, Vivianne & Durán Lima, José Elías, 2001. "Production sharing in Latin American trade: a research note," MPRA Paper 4527, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4527
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    References listed on IDEAS

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    1. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    2. Jun Ishii & Kei-Mu Yi, 1997. "The growth of world trade," Research Paper 9718, Federal Reserve Bank of New York.
    3. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    4. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    5. Ng, Francis & Yeats, Alexander, 1999. "Production sharing in East Asia : who does what for whom, and why?," Policy Research Working Paper Series 2197, The World Bank.
    6. Kuwayama, Mikio, 1992. "New forms of investment (NFI) in Latin American-United States trade relations," Series Históricas 7, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    8. Elhanan Helpman, 1998. "Explaining the structure of foreign trade: Where do we stand?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(4), pages 573-589, December.
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    Cited by:

    1. Mattos, José Carlos Silva & Acosta, María José, 2003. "Maritime transport liberalization and the challenges to further its implementation in Chile," Comercio Internacional 43, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    Keywords

    Product sharing: International trade: vertical specialisation: trade patterns;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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