A Communication-Based Model of Global Production Fragmentation

Abstract

Abstract An important characterization of the globalization of trade, and in particular of trade in manufactures, is the increased fragmentation of production as defined by Jones and Kierzkowski (1990). The basic idea they advanced is that it is important to open the ‘black box’ of the production function and focus attention on differences among the basic component processes of a production system. For example, an electronics plant may have historically produced a number of different components and then assembled them into a final product at a single geographic location. Over time these separate processes which were once agglomerated within a single plant have been segmented, with their location being geographically dispersed both within national economies and across international economies. From the point of view of the country losing an activity, this is also referred to as ‘outsourcing’ by the resident home country firm.

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