Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries

Baldone, Salvatore; Sdogati, F.; Tajoli, Lucia

doi:10.1007/bf02707601

Cited by 73 publications

(51 citation statements)

References 4 publications

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“…Görg (2000) using Eurostat data shows that there was an increase of US inward processing trade in the EU countries, in particular in peripheral countries and in the leather and textiles sectors. Baldone et al (2001) conclude that outward processing trade represents a significant share of trade between the EU15 and Central and Eastern European countries in the textile and apparel industry. According to Helg and Tajoli (2005), Germany has a higher propensity to use outward processing trade than Italy, especially towards Central and Eastern Europe, and it appears to be concentrated in a few specific sectors.…”

Section: Measuring the International Fragmentation Of Productionmentioning

confidence: 88%

Vertical specialization across the world: A relative measure

Amador¹,

Cabral²

2009

The North American Journal of Economics and Finance

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This paper investigates a specific aspect of international production linkages that, following Hummels et al. (2001), is commonly designated as vertical specialization (VS) -the use of imported inputs to produce goods that are afterwards exported. We propose a relative measure of VS-based trade that combines information from Input-Output matrices and international trade data, producing results for a large sample of individual countries and geographical areas with a detailed product breakdown over the 1967-2005 period. This measure identifies a country's trade flow as associated with VS activities when the share of exports of a good relatively to the world average is above a given threshold and it is accompanied by a relative share of imports of a related intermediate product that is also above the threshold. The quantification of VS-based trade for each country/product pair in each period is made in a relative and conservative manner, since it includes only the value of intermediate imports that surpasses what is implied by the chosen international threshold. The detailed results can be subsequently added up to get any product or geographical breakdown desired. We illustrate this measure by showing the evolution of VS activities at the world level over the last four decades using a product breakdown by technological intensity and a geographical breakdown by main areas. The results point to a substantial increase of VS in high-technology products over the last two decades. There is also empirical evidence on the sharp increase of VS activities in East Asia.

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Section: Measuring the International Fragmentation Of Productionmentioning

confidence: 88%

Vertical specialization across the world: A relative measure

Amador¹,

Cabral²

2009

The North American Journal of Economics and Finance

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“…That is, in this case the home-country firm 8 Other important contributions to the theory of fragmentation can be found in Arndt (1997), Arndt and Kierzkowski (2001), Jones and Kierzkowski (2001b) and Deardorff (2001a). 9 Such as slicing up the value chain (Krugman 1995), outsourcing (Feenstra and Hanson 1997), disintegration of production (Feenstra 1998), intra-product specialization (Arndt 1997), vertical specialization (Hummels et al 2001), or fragmentation (Jones and Kierzkowski 1990;Deardorff 2001a (Baldone et al 2001, Yeats, 2001, Athukorola and Yamashita ,2006and Kimura et al, 2007.…”

Section: Related Researchmentioning

confidence: 99%

“…It is worth highlighting the work by Athukorola and Yamashita (2006) and Kimura et al (2007) for East Asia; Baldone et al (2001), Egger and Egger (2005) and Kaminski and Ng (2005) for EU; and Görg (2000), Swenson (2005) and Clark (2006) for the US. Studies like Yeats (2001) or Jones et al (2005) analyze the phenomenon on a more global basis, covering countries from all three regions.…”

Section: Introductionmentioning

confidence: 99%

Fragmentation and parts and components trade in the Western Balkan countries

Shimbov

Alguacil

Suárez

2013

Post-Communist Economies

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As a consequence of the increasing globalization and integration of the world's markets, there has been an intensive process of international fragmentation of the production over the last few decades. This phenomenon whereby previously integrated productive activities are segmented and internationally spread is reflected in the rapid increase in parts and components trade, growing at higher rates than final goods trade. In this process, the Western Balkan countries (WBC) have not been an exception. With their recent integration into the global markets, the WBC have witnessed growth in parts and components trade that has even exceeded the world average. This paper examines the determinants of the trade that stems from the international fragmentation of production in the WBC. Using a panel data set of disaggregated bilateral trade flows, we estimate gravity equations for the period 2000-2009. Our findings support the hypothesis drawn from the theory of fragmentation that trade in parts and components is motivated by labor cost differences and by geographical and proximity reasons. The relevance of additional service link costs, as well as the influence of institutional similarity and infrastructure quality or political-economic agreements is also confirmed by our empirical research.

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“…Several contributions test whether wages, economic and geographical distance, and FDIs could explain the international fragmentation of production (Baldone et al, 2001;Fukao et al, 2003;Jones et al, 2005;Gabrish and Segnana, 2008;Turkan and Ates, 2011); another field of empirical work verifies the effects of fragmentation on employment and relative wages of skilled and unskilled workers (Feenstra and Hanson, 1999;2001;Hijzen et al, 2005;Helg and Tajoli, 2004;Zeddies, 2011), and its effects on economic growth (Baldone et al, 2007;Durking and Krygier, 2000), as well as on trade volatility (Escaith and Gonguet, 2009).…”

Section: Empirical Analysismentioning

confidence: 99%

Exchange Rate Devaluation and Reshuffling of Global Jobs

Macedoni

Sdogati

2013

JEI

Self Cite

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Current debates presume that devaluation of one country's currency may transfer the production of imported intermediate goods to the devaluating country. This paper argues that in a global production network involving more than two countries in the production of fragments, this presumption may not hold. With a simple Ricardian model of fragmentation, this paper shows that the production of fragments can be transferred only if countries have close comparative advantage. Using data from the World Input Output Database, our model is found to be empirically supported. JEL Acknowledgements:We are thankful to Lucia Tajoli, Salvatore Baldone, Anna Paola Florio, Davide Suverato, Andrea Rongone, Giacomo Saibene and Silvia Sicouri for their precious contributions. This manuscript also benefits from comments by Jonathan Willner, Antonin Rusek and the seminar's partecipants at the 73rd IAES Conference held in Istanbul. We would like to thank the anonymous referee for helpful comments.

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Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries

Abstract: F14, F15,

Cited by 73 publications

References 4 publications

Vertical specialization across the world: A relative measure

Vertical specialization across the world: A relative measure

Fragmentation and parts and components trade in the Western Balkan countries

Exchange Rate Devaluation and Reshuffling of Global Jobs

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