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- W96306802 abstract "Building on the work of Jones and Kierzkowski (1990), economists have been writing models that describe how firms are increasingly fragmenting production processes into various stages or tasks and moving them to more advantageous locations (e.g., Deardorff, 2001a, 2001b; Findlay & Jones, 2001; Grossman & Rossi-Hansberg, 2008; Jones & Kierzkowski, 2000, 2001). Most of the models in this literature draw on findings from an earlier literature on FDI, namely that firms will fragment production or tasks across different countries to arbitrage international differences in factor prices (Helpman, 1984; Helpman & Krugman, 1985). The rationale behind most models of fragmentation can be stated in simple terms: in traditional production processes, inputs are organized and combined to generate final outputs in the same location. Where there are many inputs, coordination is normally necessary and proximity helps to lower the costs of coordination and transportation. But if firms could separate the production process into different production blocks and relocate them in places with lower factor prices, the total costs of production could be further reduced. Therefore firms will unbundle their production processes, as long as the resulting reduction in production costs would more than compensate for the additional costs of coordinating remotely located production blocks and moving these production blocks around." @default.
- W96306802 created "2016-06-24" @default.
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- W96306802 date "2014-01-01" @default.
- W96306802 modified "2023-09-22" @default.
- W96306802 title "The Drivers of Global Value Chain Participation: Cross-Country Analyses" @default.
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- W96306802 doi "https://doi.org/10.1007/978-3-319-09991-0_3" @default.
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