Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85411 
Year of Publication: 
2000
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 00-056/2
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
The word fragmentation refers to a splitting up of a verticallyintegrated production process such that the separatefragments can be traded on markets. This paper is concerned withinternational fragmentation, generally allowing gainsfrom a finer division of labor based on comparative advantage inseparate fragments. A discussion of how growth inoutput can encourage fragmentation because of the increasing returnsnature of the service links required to coordinateseparate production blocks, and how drastic reductions in the costsof these service links also encourages fragmentation isfollowed by a focus on internal income distribution. It is shownthat a country that loses a labor-intensive fragment of aprocess to international competition following a reduction in costsof service links may find its real wage rising. This isespecially possible in more capital-abundant countries.
Document Type: 
Working Paper

Files in This Item:
File
Size
317.53 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.