Globalisation and Fragmentation: Evidence from the Electronics Industry in Ireland
This paper examines fragmentation and globalisation in the context of the electronics industry in Ireland. Fragmentation refers to the breaking-up of vertically integrated production processes into various components. We find empirical evidence of fragmentation in a number of data sources. Data on inward processing trade indicate that production in the Irish electronics industry is globally fragmented, and that the scale of such fragmented production is growing. Furthermore, Ireland's share of fragmentation is rising faster than that in the EU generally, especially in the electronics industry. Other firm survey data show that the scale of local fragmentation has risen relative to global fragmentation as firms in different Irish intermediate goods producing sectors trade increasingly on the local Irish market. Looking more specifically at the computer manufacturing sector, we find evidence of fragmented production in this sector in that the ratio of bought-in materials to total sales has risen significantly over the past decade.
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