Abstract

International production networks have emerged in a manifold of industries and products: sports footwear, mobile phones, cars, clothing, computers, and furniture to name only a few. While there obviously are agglomeration forces operating in some areas, dispersion of economic activities is also a fact of life. One of the consequences of disagglomeration manifests itself in a rapid expansion of international trade in parts and components. We look at the empirical evidence demonstrating trends regarding disagglomeration of production on a regional or global basis.

We also test two hypotheses stemming from our joint work on fragmentation of production:

• Growth of the world economy increases the degree of fragmentation.

• As services become cheaper and more readily available, international trade in parts and components expands.

Keywords: Fragmentation; Outourcing; Trade in parts and components

JEL classification: F11 Neoclassical Trade Models